India - increasing taxes on cigarettes and bidis to save lives..

April 12, 2010 - Raising taxes on cigarettes and bides (beedi. bidis - a thin, often flavored Indian cigarette made of tobacco wrapped in a tendu leaf) to internationally recommended levels will generate more than Rs.18,000 crore (Rs.180 billion) annually in new government revenues while saving the lives of millions of Indian citizens, according to a new report by leading Indian, American and Canadian economists and public health specialists.

The report Economics of Tobacco and Tobacco Taxation in India was released today at the India International Centre by two of its authors, Dr. Govinda Rao of the National Institute for Public Finance and Policy [NIPFP] in New Delhi and Dr. Prabhat Jha of the Centre for Global Health Research [CGHR] in Toronto. The work was funded by the Bloomberg Global initiative to reduce tobacco. (To view the report:
The Economics of Tobacco and
Tobacco Taxation in India)

India makes critical decision on education that will help convince children not to use tobacco. The government on Thursday, April 1st brought into force a new law that makes education free and compulsory for every child from age 6 to 14—the latest government initiative aimed at harnessing the economic potential of its young population. About a third of India's 1.2 billion people are under the age of 14, one of the highest ratios in the world. (Joining hands in the interest of children, Kapil Sibal, The Hindu, 1/31/2010)

"Consuming tobacco in any form is detrimental to an individual’s health, and has been shown to be a cause for many serious diseases,” says Dr. Rao, “Identifying measures to dissuade consumption should be a high priority.”

The report points out that by 2020 more than 38.4 million beedi smokers and 13.2 million cigarette smokers are likely to die prematurely due to smoking. “The recommendations include increasing taxes on beedis from Rs 14 to Rs 98 per 1,000 beedis that will increase the government revenue by Rs 36.9 billion while curbing 15.5 million premature deaths due to beedi smoking,” said Prakash C Gupta, director of Healis-Sekhsaria Institute of Public Health, quoting the research findings. The report says eliminating the small producer exemption or limiting it to truly small companies, prohibiting the sale of unbranded beedis, and mandated reporting of beedi sales and purchases will ensure higher tax compliance. India accounts for more than 85 percent of the world's beedi production.

Cigarette taxes currently account for less than 40 percent of the retail price of a package, far below the World Health Organization’s recommended levels of 65 percent to 80 percent. Raising cigarettes taxes to 78 percent of the retail price in India could avert 3.4 million premature tobacco-related deaths and raise about Rs 14,630 crore (Rs.146.3 billion) in new government revenue each year.

Reference: ‘Taxes can curb tobacco abuse’, Express News Service, 4/12/2010; Taxing beedis best way to curb tobacco abuse, says study, newKerala.com, 4/8/2010; Higher Tobacco Taxes will Save Millions of Indian Lives Curbing Consumption is a “High Priority”, Source: The Centre for Global Health Research (CGHR), BusinessWireIndia.com, 4/8/2010.

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