Cigarette tax hike is Indian government’s ‘biggest achievement’ of first 100 days

The Economic Times of India has said that the biggest achievement during the first 100 days of the new Indian government has been the imposition of the largest-ever hike in excise duty on cigarettes.

As was reported here on July 16, the Indian Finance Minister, Arun Jaitley, steeply increased excise taxes on cigarettes as part of the 2014 Budget

The specific tax on cigarettes was increased by 11-72 per cent, depending on the length of the product, with similar hikes being made on cigars, cheroots and cigarillos.

Excise was increased from 12 percent to 16 percent on pan masala, from 50 percent to 55 percent on unmanufactured tobacco, and from 60 percent to 70 percent on zarda scented tobacco, gutkha and chewing tobaccos.

Shortly after the budget announcement, the Tobacco Institute of India said the steep duty increases on cigarettes, coming as they did on the back of sharp rises in the previous two years, would provide a further fillip to the growing illicit trade in India, which already accounted for 19 percent of the cigarette market.

Public health experts, however, say the hikes will not only boost revenue generation but also help reduce the nation’s disease burden, particularly cancer, by dissuading people from using tobacco products.

About 275 million Indians (35 percent of the adult population and 14 percent of children aged 13-15 years) are users of tobacco, mainly smokeless tobacco.