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Mains Paper 2: Governance | Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.
From UPSC perspective, the following things are important:
Prelims level: Not much
Mains level: It is an interesting newscards, as it discusses the relationship between the GST and tobacco consumption in India.
News
Context
- India is the second largest consumer and producer of tobacco-based products — categorised as sin goods or demerit goods
- And it has become imperative for policymakers to devise measures(including taxation regime) to effectively curb their use
Health of a citizen has primacy: SC
- The SC has recently stayed a Karnataka High Court order
- The HC order had set aside the 2014 amendment rules to the Cigarettes and Other Tobacco Products Act, 2003
- This(stay) is in contrast to the High Court order that viewed the 2014 rules violating constitutional norms as being an “unreasonable restriction” on the right to do business and earn a livelihood
- The Supreme Court observed that the “health of a citizen has primacy”
WHO’s survey on tobacco consumption in India
- The WHO’s Global Adult Tobacco Survey (GATS 2016-17) highlights India’s distinct pattern of tobacco consumption in multiple forms such as cigarettes, bidis, chewing tobacco and khaini (smokeless tobacco)
- This is in contrast to the global trend of cigarettes being the primary source of consumption
- The average unit price of a bidi or smokeless tobacco is significantly lower than of a cigarette
- Therefore, the former is a cheaper source for consumers who are mostly from the low-income segment of society
Effects of the GST on tobacco consumption
- The nationwide implementation of the goods and services tax (GST) has not improved the situation either
- All tobacco-related products have been placed in the 28% tax slab
- There has only been a marginal rise in the price of bidi for other pack sizes after the roll-out of the GST
- In comparison, the price rise post-GST is much higher for cigarettes
- Therefore, one may be able to postulate that the GST roll-out has not had much of an impact either
(1) on the pricing of various tobacco products or
(2) in reduction of the vast disparity between its different variants - The impact has been negligible in the case of bidis
What should be done?
- The revisions in the taxation policy concerning tobacco products should ideally have a mix:
(1) of a removal of all excise and other tax exemptions irrespective of the size of the unit,
(2) restrictions on sales of loose sticks and raising taxes/duties on bidis and smokeless tobacco by a significantly higher level - Keeping in mind the increased probability of health-related issues among low-income poor households and the health-care burden
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