Bloomberg study on beedi and cigarette taxation in India

A recent study ‘Economics of tobacco and tobacco taxation’ conducted by a team of experts and funded by the Bloomberg Global Initiative to Reduce Tobacco that suggests that increasing taxes on beedis is the most effective way to reduce tobacco consumption, save lives and earn substantially higher revenues.

Quoting the findings of the research paper, Dr Prakash C Gupta, Director,
Healis-Sekhsaria Institute of Public Health, informed that the recommendations include increasing taxes on beedis from Rs 14 to Rs 98 per 1,000 beedis that
will increase the government revenue by Rs 36.9 billion while
curbing 15.5 million premature deaths due to beedi smoking. The report points out that by 2020 tobacco will be responsible for 13% of all deaths in India and estimates that without any intervention, more than 38.4 million beedi smokers and 13.2 million cigarette smokers are likely to die prematurely due to smoking.

Further, the study recommends a five-point strategy to curtail tobacco consumption by increasing taxes on beedis and cigarettes, regulating beedi production and simplifying the current complex tax system. In one of its recommendations, the report states that eliminating the small producer exemption or limiting it to truly small companies, prohibiting the sale of unbranded beedis, and mandated reporting of beedi tobacco sales and purchases will ensure higher tax compliance. Increasing taxes on cigarettes to 78% of retail price will avert 3.4 million premature tobacco-related deaths, while increasing Rs 146.3 billion in additional revenues each year. In addition, simplifying the tax system by reducing differential taxes across products will help convey a clear message that all tobacco products are harmful. Regular adjustments of tobacco taxes to account for inflation would help ensure high relative prices across tobacco products.

Dr Prakash C Gupta said, “The recommendations made in the study should be considered while evaluating tobacco taxation in India. Raising taxes on cigarettes and beedis would curb the premature death of millions of people in India while generating billions of dollars in additional tax revenues.” Further, Dr Gupta said beedis account for more than half of the tobacco consumed in the country with an estimated 100 million people - mostly the poor and illiterate – smoking beedis. More Indians die from smoking beedis than from all other forms of tobacco combined – Indians smoke eight times as many bidis as cigarettes. He further stated that beedi smoking increases the risk of oral cancer, cancer of the lung, stomach and oesophagus, heart disease, chronic lung disease, asthma and tuberculosis. Beedi smoke has proven A carcinogens, toxins and poisonous substances. While there are various campaigns and awareness drives against cigarette smoking, no one seems to be mentioning beedis, which is the biggest killer.

Pointing out that the beedi consumption is high in northern India Mr Gupta says, “India accounts for more than 85 per cent of the world's beedi production. Our country produces about trillion beedis every year. Beedis are more harmful than cigarettes because they go out more often than cigarettes and are filled with small amounts of low-grade tobacco. Beedi smoke contains high levels of tobacco specific nitrosamines - the two most potent cancer causing agents. It is high time the government took beedi smoking seriously.”

About Healis Sekhsaria Institute for Public Health:
Healis - Sekhsaria Institute for Public Health is an organization dedicated to improving public health in India and other developing countries. Established on August 1, 2004 it is a leader in quality research in India. It conducts research specific to India’s unique social and cultural settings to help assess the health situation and to help guide health services and programs. It co-hosted the 14th World Conference on Tobacco or Health in collaboration with agencies of high repute during March 8-12, 2009. It has also played an instrumental role in fostering advocacy development and has actively engaged the media on health related issues. Healis works in collaboration with leading National and International Health and Research organizations.

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