GST Council is urged to increase compensation cess on tobacco products

On the occasion of the World No Tobacco Day, the public health groups along with doctors have urged the GST Council to increase compensation cess on all tobacco products to generate additional revenue for the government to aid the COVID-19 vaccination drive.

The public health group said that tax revenue from tobacco could significantly contribute to the increased need for resources during the pandemic including vaccinations and augmenting the health infrastructure to prepare for a possible third wave and also address the economic shock from COVID-19 pandemic, an official statement said on Monday.

"The GST revenue receipts of both central and states governments have been severely affected due to the COVID-19 pandemic and, as a result, the Central government has not been able to distribute the compensation cess dues to different state governments as guaranteed under the GST," it said.

"Increasing the existing compensation cess on cigarettes and smokeless tobacco products and levying compensation cess on bidis can be a very effective policy measure to address the immediate need to raise revenue by the Central government to compensate state governments for their respective GST revenue shortfalls during the pandemic time. It will be a winning proposition for generating revenue and reducing tobacco use and related diseases as well as COVID-related comorbidities," it added.

Dr Shekhar Salkar, Renowned Oncologist, Manipal Hospital, Goa and secretary national organisation for tobacco eradication said, "There is growing evidence that smoking and smokeless tobacco increases the risk for severe COVID-19 infection. Smoking worsens lung function and reduces immunity. Tobacco users who develop COVID infection have more complications and a greater risk of fatality. It is urgent to increase taxes on all tobacco products to reduce their affordability and consumption and limit the increasing health and fatal damages and vulnerability to COVID-19 infection."

Ashim Sanyal, COO, Consumer VOICE, New Delhi said, "Unprecedented financial resources will be needed for the country to recover from the economic shock COVID-19 has created. Increasing compensation cess on all tobacco products will be a win-win proposition as it will bring in substantial revenue for the Government while motivating millions of tobacco users to quit and preventing youngsters from initiating tobacco use".

India has the second-largest number of 268 million tobacco users in the world and of these 13 lakhs die every year from tobacco-related diseases. Nearly 27 per cent of all cancers in India are due to tobacco. Tobacco use in all forms (smoking/ chewing) is associated with severe COVID-19 casualties, as per Ministry of Health and Family Welfare and Indian Council of Medical Research

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