Press release from Business Wire India
Source: The Centre for Global Health Research (CGHR)
Thursday, April 08, 2010 04:37 PM IST (11:07 AM GMT)
Editors: General: Consumer interest, Economy; Business: Banking & financial services, Business services, Tobacco; Healthcare
Higher Tobacco Taxes will Save Millions of Indian Lives
Curbing Consumption is a "High Priority"
New Delhi, Delhi, India, Thursday, April 08, 2010 -- (Business Wire India) -- Raising taxes on cigarettes and bides to internationally recommended levels will generate more than Rs.18,000 crore (Rs.180 billion) annually in new government revenues while saving the lives of millions of Indian citizens, according to a new report by leading Indian, American and Canadian economists and public health specialists.
The report Economics of Tobacco and Tobacco Taxation in India was released today at the India International Centre by two of its authors, Dr. Govinda Rao of the National Institute for Public Finance and Policy [NIPFP] in New Delhi and Dr. Prabhat Jha of the Centre for Global Health Research [CGHR] in Toronto.
"Consuming tobacco in any form is detrimental to an individual's health, and has been shown to be a cause for many serious diseases," says Dr. Rao, "Identifying measures to dissuade consumption should be a high priority."
The report concludes that without strong action over 51 million Indians alive today will die prematurely from bidi and cigarette consumption. The report finds that in spite of that fact, taxes on many popular tobacco products are far too low. Cigarette taxes currently account for less than 40 percent of the retail price of a package, far below the World Health Organization's recommended levels of 65 percent to 80 percent. Raising cigarettes taxes to 78 percent of the retail price in India could avert 3.4 million premature tobacco-related deaths and raise about Rs 14,630 crore (Rs.146.3 billion) in new government revenue each year.
Bidis account for 85 percent of tobacco smoked in India. However, they are taxed at less than 9 percent of their retail price. Raising that tax rate to 40 percent of the retail price, the report argues, would avert over 15 million premature deaths from tobacco-related diseases and raise government revenues by almost Rs 3,690 crore (Rs. 36.9 billion).
Studies show bidi smoking to be at least as harmful to health as cigarette consumption.
Says Dr Prabhat Jha, "Every year, smoking accounts for one million deaths in India - one in ten of all deaths. Half of these deaths occur amongst the poor."
"The results highlight the crucial role that the government can play in reducing tobacco-related deaths by raising taxes on tobacco products." Bidi and cigarette smokers die on average, six to ten years earlier than people who don't use tobacco.
The report also recommends tightening tax exemptions on small bidi production. In addition, it calls for a much simpler approach to taxing tobacco in India, one that allows for adjustments for inflation and reduces the current complex differentials in taxes across tobacco products.
In addition to saving lives and enhancing government revenues, the report says tobacco-related illness and death costs Indian governments and private citizens more than Rs 30,000 crores (Rs.300 billion) in the last year for which records were analyzed (2002-2003). It recommends that governments consider earmarking some of the money raised by increased tobacco taxes to support efforts to further reduce tobacco use and help bidi users and workers.
Releasing the report, Dr Govinda Rao said more work needed to be done on making Indians aware of the perils of tobacco. "The scale of the impact of tobacco consumption on the citizens of India is often lost in discussions on public health," he said, "This study aims to draw attention to these issues."
Other authors of the "Economics of Tobacco and Tobacco Taxation in India" are Rjjo M John, of the American Cancer Society, Sakhtivel Selvaraj of the Public Health Foundation of India [PHFI], R. Kavita Rao of NIPFP, R.S. Deshpande of the Institute for Social and Economic Change [ISEC], Jhumur Sengupta, James Moore of the Bill and Melinda Gates Foundation and Frank J. Chaloupka of the University of Illinois at Chicago. (Bio data attached.)
The report was funded by the Bloomberg Global Initiative to Reduce Tobacco Use and the Bill and Melinda Gates Foundation.
The report can be accessed at www.cghr.org.
The Centre for Global Health Research (CGHR) was established in 2002 to conduct large scale epidemiological studies in developing countries. CGHR is a non-profit, non-partisan academic research institution dedicated to better health. The mission of CGHR is to conduct high quality research that advances global health, with a focus on the major causes of premature mortality. Specific emphasis is on avoidance of two large and growing causes of death worldwide: HIV-1 and tobacco. It has offices in Toronto, New Delhi and Bangalore. CGHR is also affiliated with the Centre for International Health, the McLaughlin Centre for Molecular Medicine and other partners at the University of Toronto. www.cghr.org
Established in 1976, the main aim of National Institute of Public Finance and Policy (NIPFP) is to contribute to policy-making in spheres relating to public economics. The Institute conducts research in matters relating to tax policy and administration, public expenditure and control, public debt and its management, intergovernmental fiscal relations, economics and pricing of public and industrial enterprises and such other aspects of public finance as may relate to broader economic and fiscal policies. It also undertakes and organizes training courses, seminars, workshops and policy dialogue with a view to enhancing understanding of issues concerning public finance and policy. As well, NIPFP works with universities and research and training institutes, both within the country and outside, undertaking collaborative research and exchange of scholars, information and publications, NIPFP also works to disseminate information on public finance and policy by undertaking or providing for the publication of books, research reports, papers, and a journal on subjects covered by the work of NIPFP. www.nipfp.org.in.
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