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COVID Cess on tobacco products can generate 50k crores

COVID Cess on tobacco products can generate 50000 crores

Kohima, June 12 (NE): Public health groups along with Doctors, Economists, Public Health Activists urged the GST Council to consider a special COVID -19 cess on tobacco products to raise additional tax revenue needed to contribute in funding the COVID-19 stimulus package.

A press release from the Consumers’ Legal Protection Forum, Assam on June 10, 2020 said that they are appealing for a COVID cess on cigarettes, bidis and smokeless tobacco products, that can provide revenue of Rs. 49,740 crores (497.4 billion) which could cover about 29% of the stimulus package.

The forum stated that imposing COVID cess on all tobacco products will not only help raise the much needed revenue to fund the stimulus, it will also prevent the further spread of the virus especially amongst vulnerable populations by making tobacco products unaffordable which may force them to quit.

Based on studies conducted in several countries, smokers and smokeless tobacco users may be at greater risk for severe illness when confronted with COVID-19 since it attacks the lungs and behaviours that weaken the lungs put individuals at greater risk.

COVID-19 appears to be one of the biggest economic shockers India may have ever experienced. Immense financial resources will be needed for the government to repair the damage caused by this pandemic. Government of India has announced several stimulus measures (including mega Rs. 20 lakh crore package) to revive the economy and to make India self-reliant.

Among other programs, the Government has also announced in March, a Rs. 1.7 trillion ($22.6 billion) economic stimulus package providing direct cash transfers and food security measures to relieve millions of poor Indians hit by the nationwide lockdown over COVID-19.

According to Dr Rijo John, Economist & Health Policy Analyst, unprecedented financial resources will be needed for the country to recover from the economic shock COVID has created.

Even though imposing additional taxes on the general public might not be a viable policy option when consumption needs to be boosted, special COVID cess on tobacco, could be a win-win as it will discourage tobacco consumption and reduce COVID related risks while bringing in substantial revenue for the government, the forum added.

It is informed that there is an important meeting of the GST Council on June 12, 2020 and Tobacco price hike has to be discussed and a decision on it may be taken. Rs.1 COVID cess per stick of bidis and significant tax increases on cigarettes and smokeless tobacco products are expected to generate additional tax revenue to the tune of Rs. 50,000 crores.

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