30% tax on non-virginia tobacco can bring Rs 30,000 cr revenue: NHM

A non-governmental organisation

has claimed that a 30 per cent tax on non-virginia tobacco can fetch Rs 30,000 crore revenue and it can be used by the government to fight the COVID-19 pandemic.

The National Health Forum (NHM), which works in the field of tobacco control had recently written a letter to the Union Finance and Health ministries and sought to regulate the sale of non-virginia tobacco, which is not the case as of now.

"As per our estimates, a 30 per cent levy as a reverse charge levied upon and paid by the manufacturers and dealers of non-virginia tobacco products will yield a revenue increment of around Rs 30,000 crore," NHF Managing Trustee Mandakini Sinh said in a statement.

This will lead to a far wider net of taxation and all types of tobaccos will be uniformly brought into the tax net, she claimed.

"COVID-19 pandemic has caused widespread destruction of economic activity and there is a need to channel increased resources in resurrecting economic activity and provide relief to the jobless. A new source of tax collection will be a great boost to support the rebuilding efforts," Sinh said.

Currently, all tobacco products manufactured using non- virginia tobacco such as burley tobacco are in the unorganised sector and there is large scale evasion of tax by manufacturers and scant respect for the tobacco control laws, she claimed.

The non-virginia tobacco is used in the manufacture of chewing varieties of tobacco, hookah, gutkha, kiwam, gudaku, zarda and bidis that are extremely dangerous in the context of the COVID-19 pandemic as they need to be spat out after consumption, NHM said.

"These are neither appropriately taxed nor its growers, who are the poorest of poor farmers, get stable prices for their produce. There are private intermediaries and middlemen who take advantage of the situation and milk the poor Indian farmers," the NGO said.

In its letter to the Central government, the NHM appealed for regulating the sale of non-virginia tobacco, which constitutes about 85 per cent of tobacco grown in India, through auction platforms overseen by the Tobacco Board of India.

"The initiative will have a double benefit -- firstly the enhancement of revenue and secondly controlling the sale of the so far unregulated tobacco products in India," the release said.