Health activists have urged the government to tax bidis at 28 percent in order to ensure that the use of bidis is curtailed to a large extent.
“Taxing bidis below 28% under GST will cause a sharp increase in bidi consumption and further aggravate the public health and economic burden caused by bidi use in India,” Dr Rijo John, Economist and Health Policy Analyst said.
Interestingly, the data which simulates economic scenarios depending on how bidis would eventually be taxed in the impending GST regime points to a dramatic increase in bidi use if public health concerns are ignored at the next crucial meeting of the GST Council and bidis are taxed at a rate lower than 28%.
The scenarios, modelled by professional economists, draw a direct linkage between the level of taxation of bidis and the extent of consumption. The most direct and effective method for reducing bidi consumption is to increase its price through tax increases. Given this overarching principle, the data scenario infers that if the Government settles for a 18% GST rate, there will actually be an upswing in consumption by 1.25%, considered to be massive in volume terms while if a 28% slab is slotted for bidis, consumption will actually dip by 0.77% which is also a substantial swing.
Interestingly, if excise burden is also applied over and top of the GST incidence, then consumption further dips by a bit over 1 full percentage point, a huge behavioural change, given the bidi market in India runs into billions.
“The bidi consumption in India is price elastic and hence responds negatively to changes in prices. This is why a change in tax slabs could make a significant change in consumption and hence all the more reason why the Government and the GST Council should not let this opportunity go a begging to leverage the instrument of taxation to discourage bidi consumption- a stated public policy goal. Moreover, a 28% GST applied on bidis would only barely surpass the current tax burden on bidis in India. Hence, settling for a GST rate less than 28% on bidis would result in a public health disaster in India as bidis are the most commonly used form of tobacco in the country,’’ added Dr Rijo John.
Importantly, the startling issue of this the public health failure has been brought to the fore by none other than the bidi workers themselves. In a letter to the Union Finance Minister, bidi workers from the states of Tamil Nadu and Uttar Pradesh have blown the cover of bidi owners, alleging that these industrialists and business people have prevented adequate taxation of bidis in the name of hapless bidi workers who continue to work and live in abysmal conditions facing prolonged exposure to tobacco. These workers are also at high risk for life-threatening diseases such as tuberculosis and lung cancer among others.
‘’We ourselves are the victims of the bidi industry owners, who take advantage of us and manipulate the weak enforcement and regulatory system in the bidi industry to make our lives more miserable. We do not want you to consider their request for lower taxation, benefits or subsidies that they are seeking in our name. (Referring to bidi owners)”-Thangam, 45 years, Tirunelveli district, Tamil Nadu has been rolling bidis since she was 10 years old.
And the plight that bidi workers and smokers face, are validated in force by the medical community. Over 1 million deaths in India every year are tobacco related and almost two-thirds of tobacco consumers in India actually consume bidis leading to debilitating diseases and even death.
This has sensitised the medical fraternity to the absolute imperative for higher taxation on bidis.
“As physicians, we witness this “pleasure” causing caused cancers as well as pulmonary and cardiovascular diseases and killing hundreds of “poor” people every day. All these studies convey the clear message that bidis are deadly and should be made unaffordable for the poor. By keeping taxes at lowest for bidis we are in principle subsidising death for poor”, said Dr.US Vishal Rao, Head and Neck Oncologist, Bengaluru.
“Considering the staggering health and economic impact of bidis, which is used by the majority of India’s 275 million tobacco users, not categorizing bidis in the highest GST rate slab will only accelerate the death and diseases caused by tobacco and work against the goals stated in Government’s recently announced national health policy”, Bhavna B Mukhopadhyay, Chief Executive, Voluntary Health Association of India.
Given this backdrop, it’s disappointing that some states are still holding on to their stated position for lower taxation on bidis, clearly prioritising commercial considerations over health concerns.