Smoking to be costlier as Budget proposes 16 per cent hike on cigarette duty
Shares of cigarette companies, including Godfrey Phillips India and ITC Ltd, plunged by up to 5 per cent on the BSE on Wednesday after Finance Minister announced a hike in taxes on cigarettes.
Published: 01st February 2023 01:18 PM | Last Updated: 02nd February 2023 09:25 AM | A+A A-
BENGALURU: While the Union Government has increased the National Calamity Contingent Duty (NCCD) on cigarettes to 16%, experts working on tobacco control said this is a negligible tax increase which will increase the overall taxes on cigarettes by only about 1.8%. They said that the retail price of cigarettes will not be more than 1%.
Economist and public health policy analyst Rijo M John said: “The budget comes as a disappointment as there has been no significant hike in tobacco taxes for the past 5 years. NCCD is a specific tax levied per 1,000 cigarette sticks and is a small part of the total tax on tobacco. The overall tax on cigarettes that include the Good and Service Tax, compensation cess and NCCD accounts for 52%. With this marginal hike in NCCD, it will be around 52.5% now, far behind the World Health Organisation’s recommendation of 75%.”
Going by the 16% NCCD hike, for example, cigarettes under 65mm in length which used to be taxed at Rs 200/1,000 sticks will now be taxed at Rs 230/1,000 sticks, and under 70mm sticks taxed at Rs 545/1,000 sticks will now be taxed at Rs 630/1,000 sticks. A retail consumer who was buying a cigarette pack for say Rs 200, will have to spend Rs 2 extra per pack, Rijo explained.
He expressed concern that this hike might work in the favour of the tobacco industry as any price hike on cigarettes beyond 1% will go into the pockets of the tobacco industry.
SJ Chander, convenor of Consortium for Tobacco Free Karnataka, said: “Among the tobacco consumers in India, cigarette smokers are just 10-15%. The rest are users of beedis and smokeless tobacco which are much more harmful than cigarettes. The budget has completely remained silent on any tax revisions on beedis or smokeless tobacco. The tax on cigarettes is also too low to act as a deterrent to discourage use among the youngsters.”