NEW DELHI: A 10 per cent increase in cigarette prices will lead to almost 3 per cent decrease in consumption and 7 per cent increase in government revenues, according to study by Public Health Foundation of India (PHFI).
Key findings from PHFI study on “An Empirical Study of India’s Fiscal Policies against Tobacco: A State Level Analysis” was released by Union Health Secretary Luv Verma.
The study highlighted that a 10 per cent increase in bidi prices will lead to almost 5 per cent decrease in consumption and 4 per cent increase in government revenues.
Further, it found that cigarette excise can be increased by 370 per cent of present level, leading to a 54 per cent decline in consumption and 115 per cent increase in revenue while bidi excise can be increased by 100 per cent of present level, leading to a 40 per cent decline in consumption and 22 per cent increase in revenue.
The study also found that in India, so far, taxes have not been used effectively to reduce tobacco consumption.
“The current tax rates of tobacco products are not only low but the tax structure of tobacco products are complex and tax governance poor. As a result, tobacco taxes and prices have not deterred tobacco consumption.
“Bidi, which is largely consumed by people, is least taxed. Significant potential exists in India to hike taxes rates in India to reduce tobacco consumption and mop up revenue to the government which is presently fiscally-challenged,” said Dr Sakthivel Selvaraj, Senior Public Health Specialist, Economics and Financing, PHFI.
“According to the Global Burden of Disease Study 2010, tobacco use is the second largest risk factor for death.-PTI
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