Tax cut on tobacco under High Court Lens

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Tax cut on tobacco under High Court Lens
 
The state of deserts experienced a high temperature in the recent past not because of weather component but the clash of opinions regarding tax rise on tobacco in the state. The High Court’s decision to put stay on the controversial tax proposal by BJP added a silver lining to the grey cloud. The same state which was in the news for appreciation by the WHO for its effective tobacco control measure suddenly landed amidst huge controversy for its petty negative move in the health sector. When asked about the same to Dr Rakesh Gupta, Senior Oncologist and President, Rajasthan Cancer Foundation about the statistical impact of tax reduction on tobacco, he averted, “The State loses revenue of ~120 crores this year (in the last fiscal year- 2014-15 until Feb 2015, it had earned a revenue of 616 crores) whereas if it had increased it by another 20%, it would have earned a total revenue of ~740 crores (a gain of 20% in the revenue for 2015-16 from tobacco taxes). More importantly, by reducing tax, it is helping tobacco industry by giving new customers who otherwise could not afford cigarettes at least. This in turn will mean more tobacco-related illness, increase in state health-expenses and wider poverty eventually due to higher productivity losses because of premature loss of lives by 6-8 years!”

The above quoted statement by the respected Senior Oncologist and President of Rajasthan Cancer Foundation clearly corroborates the critical impact in relation to the recent proposal by the BJP government. According to Shri Ashok Gehlot, Former Chief Minister, who in his regime raised the tax on tobacco from 12.5 to 65 percent declares the recent move of tax reduction on the same as disastrous by saying, “When everyone except some BJP MPs believes that tobacco is harmful, this arbitrary move to lower tax on tobacco raises suspicion.” The words by Shri Gehlot clearly sends waves of concern in regard of the health of state. 

 

The controversial tax reduction phenomenon plotted a mystery when it structured differentiated taxation pattern on tobacco products i.e. 20%reduction on Cigarettes but none on bidis. In reference to the same dilemmatic situation Dr Gupta added substance by saying, “(20% tax reduction for Cigarettes and Smokeless tobacco- from 65% to 45%). On closer scrutiny, it has been carefully structured decision with lobbying (guidance) from cigarette and smokeless tobacco industries. I say so because as per GATS India 2010 report, Cigarette smoking and Tobacco chewing are placed on 17th and 25th positions for the criteria of "their last purchase made" by their respective current users. Hence, the motive is to give a bigger market to industries of these two products ( I assume primarily it will help ITC and Godfrey Phillips- the Cig Cos. and Miraj- the Raw tobacco manufacturer of the State) “.  The quoted words by the senior oncologist emancipate the fact that tax reduction is a culmination of strategic moves by the government under influence of tobacco industry.  

 

The move of tax reduction with such a higher percentage is not only a matter for the state concerned but a national one too. The reduction in one state could impact the taxation pattern in other states too. However, some senior personnel differ in opinion. For instance, Dr Rakesh Gupta, differed by saying , Not unlikely as it could be a part of bigger game plan countrywide in concurrence with same political party in power in the neighboring states; and, centre too wherein the MOHFW has successfully but shamelessly deferred larger and more effective pictorial warnings in April 2015 plus other recommendations its preceding Minister had made in October 2014- Amendments in COTPA for stricter measures and higher penalties”. 

 

The serious implication of tax reduction puts the future of the state into darkness as quoted by the senior persons in the former lines. The move if implemented would mark a much severe challenge in the forthcoming days. The reduction might bring money to the state in form of revenues but it would drain out the richness at the same time. The financial status of the state may implicate a rise on the weighing scale but the rise is temporary. The serious implications would be observed later in form of rising health issues in the forthcoming years.  On being asked to Senior Oncologist, Dr Gupta, presented his views by saying, “The bigger forthcoming challenge in tobacco taxation will be the ruling on GST application from next fiscal year. The uncertainty and the resultant fear is whether tobacco will be taxed like other products at 8% countrywide or will be considered a "Sin tax" with powers to the States to tax specifically for higher revenue! “

The directive of High Court to put a stay on the taxation order has really nailed a ray of hope for the people who opposed it whole heartedly. The stay if impacted permanently would not only result into a better future for the state but would also plant the seeds positivity in the minds of people who blamed the government for its taxation policies. Concluding the controversies, a positive hope still persists in the minds of health advocates. In regards to the same and suggesting strong alternatives to combat the decision of tax cut by government, Dr Gupta averted, “In India, all that we have got in tobacco control has mostly come through the directive of the Apex court. Hence, I consider that it will either take up the issue suo motto or based on PIL once situation deteriorates to the nadir.

But, YES, meanwhile the government should:

(1) Strengthen its public awareness campaign on benefits of

(a) Quitting (to motivate people to quit through its helpline that has an informal quitline that I supervise; and mandate tobacco cessation delivery through all health professionals and hospitals in Government- and private-sector); and,

(b) tobacco-free life (through media campaigns by engaging former users); plus,

(2) Empowering the Youth of the State to SAY NO TO TOBACCO; and,

(3) Resolve to have a tobacco-free generation for all born after May 2005.”

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