About 19 million lives could be saved every year if India increased tax on beedis to 40 per cent from the present 9 per cent and on cigarettes, 78 per cent from 38 per cent, said experts here today.
Director of the National Institute of Public Finance and Policy M Govinda Rao said the tax structure in India on tobacco was not based on nicotine content. Cigarettes are taxed based on their length. Tobacco taxes were not regularly adjusted for inflation and over time tobacco products were becoming increasingly affordable, he added.
A report — Economics of tobacco and tobacco taxation in India — by both Indian and international economists released here today states simplifying the tax system by reducing differential taxes across products will help convey a clear message that all tobacco products are harmful. The report is part of a series of the Bloomberg Initiative to reduce tobacco use.
Studies of price elasticity in India have found that a 10 per cent increase in tobacco prices is estimated to bring down beedi consumption by 9.1 per cent and cigarette consumption by 2.6 per cent.
Director of Centre for Global Health Research, Toronto, Prabhat Jha, said the number of smokers in India were increasing fast. In urban areas, there has been a near doubling of smokers with 13 per cent smoking prevalence in 1999 increasing to 25 per cent by 2006.
In addition, he said, quitting before a disease struck, was highly uncommon in India. “Only two per cent of Indian adults are ex-smokers as compared to 40 per cent in the US or UK, or 15 per cent in Thailand. With an estimated 120 million smokers, India has the second-largest group of smokers in the world after China.
The report points out that cigarette taxes of 38 per cent are way below the recommended rates of 65-80 per cent of retail price present in countries with effective tobacco control policies. Beedis are very cheap, with an average pack costing Rs 4. Taxes on beedis average only nine per cent of its retail price, it states.