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India Acts to Save Lives by Taxing Cigarettes, Bidis at Highest Rate

June 08, 2017

In a historic move to save lives and protect public health, the Indian government has announced that it will tax cigarettes, smokeless tobacco and cheap, hand-rolled cigarettes called “bidis” at the highest rate of 28 percent under a new Goods and Services Tax (GST) structure.

India’s new tobacco tax rate is a critical step forward in a country with 275 million tobacco users – the second most in the world after China. It will encourage current tobacco users to quit, prevent potential tobacco users – especially young people – from starting and help reduce the one million deaths tobacco use causes in India each year.
This decision is especially significant for its treatment of bidis. Known as the “poor man’s pleasure,” bidis consist of shredded tobacco, hand-rolled in a tendu leaf. Bidis have previously been omitted from tax increases on tobacco products due to a powerful and well-connected bidi industry. Incredibly popular, bidis are consumed by two-thirds of all adult smokers in India and far outsell regular cigarettes. Like other tobacco products, bidis exact a deadly toll on health, causing lung and other forms of cancer and contributing to chronic bronchitis, tuberculosis and other respiratory diseases.

Smokeless tobacco will also be taxed at the highest rate under the GST. Smokeless tobacco use kills more than 200,000 people in India each year, making India the oral cancer capital of the world.

Increasing tobacco taxes is the most effective and direct way to reduce tobacco use. By raising the price of tobacco products, higher taxes encourage more users to quit and discourage potential users from starting. Studies have shown that a price increase of 10 percent worldwide would reduce the number of smokers by 42 million and save 10 million lives.

The GST negotiations in India featured intensive lobbying by every sector of the tobacco industry, including major cigarette companies, bidi “barons” and smokeless tobacco manufacturers. By subjecting tobacco to the highest GST rate, the government of India has shown that public health is more important than tobacco company profits. This decision should serve as an example for governments around the globe.

We congratulate the government of India for its bold decision to protect health and save lives for generations to come. The government will now need to stand strong against the tobacco industry appeals and lobbying that will start immediately to water down the decision by attempting to exempt certain tobacco products. Strong, proven tobacco control policies like higher taxes are desperately needed if India is to reverse the tobacco epidemic. Without urgent action, tobacco use will kill one billion people worldwide this century.