Tax burden on cigarettes in India far below global best

Hyderabad: A global study on taxation on tobacco products revealed that tax burden on cigarettes in India is far below the global standards.

Tobacconomics, which is based at the University of Illinois at Chicago's Institute for Health Research and Policy, carried out the global study. It released the first edition of the International Cigarette Tax Scorecard, assessing the performance of cigarette tax policies in over 170 countries, including India.

In the study, India got an overall score of 1.88 out of five possible points, which is slightly better than the South-East Asia average (1.82), but lower than the global average (2.07) and scores of top performing countries (4.63).

The top performing countries are Australia and New Zealand, which reflects their high, uniform specific cigarette excise taxes with regular increases that have significantly reduced the affordability of cigarettes.

The Tobacconomics Scorecard assesses countries' cigarette tax policies based on international best practice using data from the World Health Organization from 2014-2018. Nearly half the countries scored less than two out of the five-point maximum. There has been little improvement from 2014-2018. The global average score rose only slightly from 1.85 in 2014 to 2.07 in 2018.

India had significantly improved its score on cigarette taxation policy from 1.38 in 2014 to 2.38 in 2016 after which it declined to 1.88 in 2018 due to the lack of tax increases on tobacco and increasing affordability of cigarettes. Overall scores, however, improved in 89 countries. Introduction of significant cigarette excise taxes, simplification of previously complicated tiered cigarette excise tax structure and large tax increases are the reasons why some countries improved their scores.

"The Scorecard shows considerable untapped potential for cigarette tax increases to raise revenue for a Covid-19 recovery and importantly, prevent premature deaths and promote a healthy and productive workforce," said Tobacconomics Director and lead author of the scorecard, Frank J. Chaloupka.

The current tax burden on cigarettes in India is 52 per cent and is far below the standard of international best practice, he said