Impose higher taxes on all illegal tobacco products: TII

NEW DELHI: High taxation should not be restricted only to cigarettes but all forms of tobacco must be included to counter the growing menace of contraband products, according the Tobacco Institute of India.

"Widening the tax base will not only help the government realise huge revenue potential which remains untapped but would also help in arresting the unabated growth of illegal cigarettes and be in consonance with the stated objectives of tobacco control policies of the government," the Tobacco Institute of India (TII) Director Syed Mahmood Ahmad told PTI.

TII is an industry body representing the cigarette industry.

He further said: "There is an urgent need to reverse the undesirable consequences of an excessive and discriminatory taxation policy on cigarettes. Legal cigarettes are only 12 per cent of the total tobacco consumption in India with the balance 88 per cent in other forms largely in the unorganised sector."

Ahmad said that as a consequence of growing tax incidence, there has been a double digit drop in legal cigarette volumes in the July-December 2014 period as against July-December 2013.

Elaborating on the consequences of higher taxes, he said: "It simply catalyses the growth of the illegal cigarettes trade and compels people to switch to cheaper illegal cigarettes or low quality, cheaper forms of tobacco consumption."

In the Budget, Finance Minister Arun Jaitley increased duty on cigarettes in the range of 11-72 per cent.

Excise duty was increased to 72 per cent on cigarettes of length not exceeding 65 mm and to 11-21 per cent for those of other lengths.

Similar increases were also proposed on cigars, cheroots and cigarillos. Likewise, excise duty on pan masala was increased to 16 per cent from 12 per cent, unmanufactured tobacco to 55 per cent from 50 per cent and gutkha and chewing tobacco to 70 per cent from 60 per cent.