Effectiveness of tobacco tax in tobacco control: evidences from India
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1
PHFI IIPH Bhubaneswar, India
3
WHO Country Office India, India
Publication date: 2018-03-01
Tob. Induc. Dis. 2018;16(Suppl 1):A688
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KEYWORDS
TOPICS
ABSTRACT
Background:
Tobacco
tax is proved to be the most important cost effective instrument of tobacco
control. There are ample evidences
suggesting the role of tax in reducing tobacco consumption. However, there are limited
evidences regarding the effectiveness of tobacco tax in tobacco control in
India. This study has been undertaken to
address the current knowledge gap.
The
objectives are to:
·
examine
tax structure, tax rates and price trends across tobacco products
·
estimate
affordability of tobacco products due to rise in income
·
examine
excise and total tax burden across tobacco products
Methods:
This study used secondary data from
Government publications: Annual Survey of Industry (ASI), Ministry of Finance,
Labour bureau, during 2005-06 to 2015-16. It
compared wholesale and retail price indices of tobacco products with the
general price indices to estimate the relative price increase of tobacco
products. Affordability was measured comparing rise in per capita income and
inflation rate of tobacco products. For tax burden, the share of excise tax in
the retail price was calculated.
Results:
The relative Whole Sale price Index (WPI) of
tobacco products showed increasing trend between 2005-05 and 2015-16. Across
products, the relative WPI was lowest for bidi. Affordability of cigarette increased
during 2005-06 to 2012-13 and declined during 2013-14 to 2015016. For bidi and chewing tobacco, affordability
increased over the years. The excise tax burden was 40% for cigarette and was
only 4% for bidi in 2015-16. Total tax burden on bidi and cigarette was 20% and
was 59% respectively.
Conclusions:
This study suggests to increase prices of all
tobacco products to raise the excise burden comparable to the
international standard to make it more effective from a tobacco control
perspective. More importantly, the tax rate on bidi has to be substantially
increased for which affordability is declining.