Are taxes on cigarettes adequate to deter consumers in India? Premium

Explore whether India's cigarette taxes effectively deter consumption, falling short of WHO's recommended benchmark for public health.

One puff of a cigarette, within seconds, infuses the human bloodstream (via the lungs) with nicotine, the acutely addictive and carcinogenic chemical in tobacco. Nicotine binds to the brain’s cellular receptors, sparking the dopaminergic reward system to keep smokers hooked. And then there are additives in cigarettes, such as menthol, which gets nicotine to linger longer in the body, affecting the central nervous system.

Tobacco use, one of the major causes of death and disease in India, kills 1.35 million people every year, from cancer, lung disease, cardiovascular disease and strokes, according to the World Health Organization (WHO). India happens to be the world’s second largest consumer and producer of tobacco. A huge source of revenue for the country, cigarettes aren’t banned, but every Budget, raises the price of a stick.

The additional excise duty, starting February 1, pushed up the price of cigarettes by 15–30% yet still fell short of the WHO’s benchmark on how much taxes should make up the retain price.

“We have strong evidence globally about the effectiveness of tax hikes in reducing tobacco consumption in India,” Upendra Bhojani, senior fellow, and the lead, Centre for Commercial Determinants of Health, at the Institute of Public Health, Bengaluru, told The Hindu. But he added that the challenge is that historically, especially until the last couple of years, tax increase on tobacco products “was not significant,” and especially did not keep pace with the consumer inflation index.

“This makes tobacco products affordable rather than costly,” Dr. Bhojani said.

He pointed to a 2017 peer reviewed paper that studied the association between State-level VAT rates and tobacco use in India. It showed that every 10% increase in cigarette VAT rates was associated with a decrease of 0.9% or 17.2% in cigarette smoking by men, and a decrease of 6.5% or 21.6% in the dual use of cigarette and beedi smoking among men. “The Tobacco Control Policy India survey showed lower decline, the Global Adult Tobacco Survey showed an even steeper decline,” said Dr. Bhojani.