NGOs attack Punjab move to cut VAT on cigarettes

A decision by the Punjab government to reduce the value added tax (VAT) on cigarettes has been opposed by NGOs and health experts.

NGO Voice of Tobacco Victims (VoTV) criticized the state government decision to roll back taxes on cigarettes from 50 percent to 20.5 percent.

"Neighbouring states like Himachal Pradesh, Rajasthan and Jammu and Kashmir have increased VAT on tobacco products. Even Bihar's government has proposed to increase VAT on tobacco products to 57 percent this year," Ashima Sarin, project director of Voice of Tobacco Victims, told mediapersons here Monday.

The Punjab government announced a reduction in VAT on cigarettes last week saying that the earlier increase, from 20.5 to 50 percent, had led to smuggling of cigarettes from neighbouring states where the VAT was lower.

VAT on cigarettes had been increased by Punjab in the annual budget in March last year. The increase was to generate a revenue of Rs.100 crore annually and the money was to be used for a government-owned Cancer Fund.

But the NGOs are unwilling to buy the Punjab government's excuse on VAT reduction on cigarettes due to smuggling.

"Smuggling is (due to) government's own weak enforcement and strict action can be taken to tackle the issue instead of decreasing the VAT," Sarin said.

Supporting the NGOs on this issue, Pankaj Chaturvedi, professor of surgical oncology at Tata Memorial Hospital, said that lowering the price of tobacco products speaks volumes about the state government's commitment towards the health of residents and its commitment to fight against cancer.

Chaturvedi said that a Global Adult Tobacco Survey (GATS 2010) had shown that nearly 24 lakh of the adult population (15 years and above) of Punjab consumed tobacco products in some or the other form.

"As per John Hopkins experts, out of these 24 lakh, nearly nine lakh Punjabis will die prematurely due to serious illnesses such as cancers, heart diseases etc," he said.

Lawyer and activist Amteshwer Kaur wondered whether revenue and smuggling were more important for the Punjab government than the lives and health of people.

She said that it was ironical that the Punjab government was setting up cancer facilities worth crores of rupees across Punjab and yet was reducing the tax on cancer-causing cigarettes.

Cancer surgeon Prahlad Duggal said that higher taxation was a powerful deterrent to curb tobacco consumption.

"Triple the taxes to double the revenue and bring consumption down to half. This will be a better decision," he said.