Strengthening Public Health Through Tobacco Tax Reforms

Syllabus: GS2/ Health

Context

• India, the world’s second-largest tobacco producer and consumer, continues to face a severe public health burden as cigarette taxes make up only about 53% of the retail price, well below WHO benchmark.

About Tobacco 

• Tobacco is a commercial crop obtained mainly from the plant Nicotiana tabacum, whose leaves contain nicotine, a highly addictive alkaloid that stimulates the central nervous system.
• It is used in smoking forms (cigarettes, cigars, beedis) and smokeless forms (gutka, khaini, chewing tobacco).

Health Burden of Tobacco in India

• Tobacco use causes approximately 1.35 million deaths annually in India due to cancer, cardiovascular diseases, lung disorders, and stroke.
• Nicotine is highly addictive and activates the brain’s dopaminergic reward system, making cessation difficult.
  • Additives such as menthol increase nicotine retention and enhance addiction potential.
• Cigarette butts containing plastic filters contribute significantly to environmental pollution, further affecting public health.
• A study of WHO finds that India loses 1% of its GDP to diseases and early deaths from tobacco use.

Taxation as a Public Health Tool

• WHO Benchmark: The WHO recommends that taxes should constitute at least 75% of the retail price to effectively reduce tobacco consumption.
  • Higher taxation reduces affordability, particularly among youth and low-income users, who are more price-sensitive.
• Indian Scenario: Cigarette taxes currently account for only 53% of retail price.
  • GST on cigarettes and smokeless tobacco stands at 40%, along with additional cess.
  • However, GST on beedis has been reduced to 18%, despite their high prevalence among lower-income populations.

Other measures taken by government 

• Framework Convention on Tobacco Control (FCTC): India is a signatories of the FCTC, launched by WHO in 2005.
  • It aims to reduce tobacco usage worldwide by helping countries develop demand and supply reduction strategies. 
  • Under Article 5.3, the Convention requires parties to protect public health policies from the industry’s commercial interests.
• The Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply, and Distribution) Act (COTPA) 2003 has 33 sections governing the production, advertisement, distribution, and consumption of tobacco.
• The National Tobacco Control Program (NTCP): India launched NTCP in 2007. It is designed to improve the implementation of COTPA and FCTC, improve awareness about the harms of tobacco use, and help people quit it. 
• Prohibition of Electronic Cigarettes Bill, 2019: It prohibits production, manufacture, import, export, transport, sale, distribution, storage and advertisement of e-cigarettes.

What are the Governance Challenges?

• Industry Interference: The WHO Framework Convention on Tobacco Control (WHO FCTC) has repeatedly flagged tobacco industry interference in policy-making. 
• Policy Inconsistencies: Differential GST rates (40% on cigarettes vs 18% on beedis) create distortions and undermine equity goals. Beedis, largely consumed by lower income populations, remain relatively affordable.
  • Inadequate inflation adjustment reduces the real impact of tax hikes.
• Non-compliance with Packaging Guidelines: Smokeless tobacco products frequently violate COTPA (Cigarettes and Other Tobacco Products Act) packaging guidelines, with studies showing up to 92.8% of packages missing mandatory pictorial health warnings.

Way Ahead

• The measures should be taken to align tobacco taxation with the WHO’s 75% benchmark to reduce affordability. Also rationalise GST by increasing taxes on beedis and smokeless tobacco to address health inequities.
• Ensure strict implementation of FCTC Article 5.3 to shield policy-making from industry interference.
• Integrate environmental accountability for tobacco waste under extended producer responsibility frameworks.

Source: TH