Taxation of smokeless tobacco in India.
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Date
2014-12
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Abstract
BACKGROUND: The role of fiscal policy, especially taxation, though has been proved to be an effective instrument of tobacco control, its application
is limited in India due to several reasons. This paper examines the tax structure, price and affordability of SLT products in order to provide evidence
on how to strengthen the role of fiscal policy in tobacco control. METHOD: Secondary data on tax structure and revenue from tobacco products
were collected from the Ministry of Finance, Government of India. In order to measure the rise of prices corresponding to the increase in tax rate,
the retail price index (RPI) and Whole Price Index (WPI) of SLT products were compared with the price index for all commodities for the period
2006–2012. The affordability of tobacco products is calculated by dividing prices of tobacco products by per capita income. RESULTS: During the
last 6 years, the tax rate on SLT has gone up leading to a rise in the prices of SLT products more than the general price rise. However, the price
rise is less than the per capita income growth indicating increasing affordability. The study observed a decline in the consumption of zarda and
kahini due to the price increase during 2008–2013. However, the decline in the consumption of zarda is less compared with khaini due to a very
low rise in its price. CONCLUSION: The prices should be raised more than the growth in income to influence consumption. Tax administration is a
major challenge for SLT products and strengthening it could enhance revenue collection from SLT products.
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Keywords
Affordability, consumption, tax structure
Citation
Rout S K, Arora M. Taxation of smokeless tobacco in India. Indian Journal of Cancer. 2014 Dec; 51(5_Suppl): s8-s12.