Taxing time for smokers.
IN A bid to discourage smoking, Health Minister Harsh Vardhan has written to Finance Minister Arun Jaitley to impose a steep tax hike that would increase the cost of cigarettes to ` 3.50 a stick.
Ahead of the general budget next month, Harsh Vardhan also asked for doing away with the tax exemption given to the bidi industry to discourage their use.
"The absolute number of male smokers in the country has increased to 105 million from 83 million in the last decade and cigarettes are displacing bidis in popularity.
Tobacco use imposes huge costs on the country, including contributing to a huge health cost and forcing over 15 million Indians into poverty from ill health every year," said the letter sent on Thursday.
"The more expensive they become, the better it is for all of us.
Their price should be hiked. They should become rare," Harsh Vardhan said on Friday.
If his proposals are implemented, Harsh Vardhan told Jaitley, they would lead to over three million smokers quitting and three million potential smokers not starting at all.
"The new tax would also bring about ` 3,800 crore in revenue.
While the hike in cigarette price would be borne mostly by the upper income class, the reduction in mortality would benefit the low- income population," he said.
In his letter, he asked Jaitley to consider a substantially large increase applied to all length of cigarettes. Adopting a simpler and more efficient tax administration, starting with higher cigarette tax, will yield public health and fiscal benefits.
"Specifically, I propose to reform tobacco taxes hike in the 2014 budget of the new government and implement a large but feasible tax hike in the 2014 budget on cigarettes to ` 3.5 per stick.
The tax would apply to all length to prevent the industry shifting production and marketing of lower length cigarettes as has been the past practice," Harsh Vardhan said.
He said there is an urgent need to regulate the bidi industry by removing the exemption on tax given to manufacturers producing less than 2 million bidis.
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