Tobacco.org

• SUNLEY: Favoured tax treatment will boost sales of bidis 

Recent news that the government is planning to reduce tobacco cultivation by half over 10 years is an important development. However, because this proposal would lead to an increase in tax on cigarettes but not on bidis, it would have limited health benefit. Taking into account the health risks of each, bidis are under-taxed.

India’s market for smoked tobacco is dominated by bidis, around 10 bidis are consumed for each cigarette. Far more Indians die from smoking bidis than from cigarettes. Increasing tobacco prices through higher taxes is the most effective method of reducing tobacco use, but continuing to maintain low taxes on bidis will not substantially reduce tobacco consumption or improve the public’s health.

Despite the harm caused by bidis, taxes on bidis are currently just one-twelfth the tax levied on non-filter micro cigarettes, low-priced cigarettes most likely to be purchased by the poor, and are just 2% of the tax on more expensive standard filter cigarettes. As a result, bidis represent less than 6% of India’s total tobacco excise revenues despite making up the vast majority of tobacco smoked.

This favoured tax treatment increases the use of bidis. . . .

Excise taxes should be hiked for all tobacco products. Ultimately there should be a single tax rate for all cigarettes that is set higher than the current rate for standard filter cigarettes. Over several years, the tax on bidis should be raised to the uniform rate for all cigarettes. . . .

However, if the poor bidi smoker reduces his consumption of tobacco, wouldn’t he and his family be better off? The government surely has better ways of helping the poor than providing cheap tobacco products.

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