Photo by Afif Ramdhasuma on Unsplash
India's Parliament has recently passed legislation that dramatically increases excise duties on tobacco products, a move the government frames as a public health intervention but one that has sparked considerable debate about its actual impact on farmers, workers, and consumption patterns.
The magnitude of these tax increases is unprecedented. Consider cigarettes where the current excise duty ranges from ₹200 to ₹735 per thousand cigarettes. Under the new law, this jumps to between ₹2,700 and ₹11,000 per thousand, a nearly tenfold increase at the lower end. This isn't interfering at the margins; it's a fundamental restructuring of tobacco taxation.
Other tobacco products face similarly steep hikes. Chewing tobacco duties quadruple from 25% to 100%. Hookah tobacco sees a more modest but still significant rise from 25% to 40%. Most dramatically, smoking mixtures for pipes and cigarettes will face a 325% duty, up from just 60%. These aren't adjustments, they're prohibitive barriers designed to make tobacco consumption financially painful.
The Public Health Rationale
Finance Minister Nirmala Sitharaman defended these increases by pointing to World Health Organization benchmarks. Currently, India's tax incidence on cigarettes sits at approximately 53% of the retail price. The WHO recommends 75% as the threshold that effectively discourages consumption while maximizing public health benefits.
This gap matters. When the Goods and Services Tax was introduced, even with the additional cess, India couldn't reach the WHO benchmark consistently. The result? Tobacco products remained relatively affordable, undermining efforts to reduce consumption. By dramatically raising excise duties, the government aims to price tobacco beyond easy reach, particularly for young people and lower-income groups most vulnerable to addiction.
The logic is straightforward, where higher prices mean fewer people can afford to start or maintain tobacco habits. In theory, this should translate into reduced disease burden, lower healthcare costs, and longer, healthier lives for millions of Indians.
The Human Cost Nobody Wants to Discuss
Yet this policy doesn't exist in a vacuum. Opposition members, particularly Congress's Pramod Tiwari, raised uncomfortable questions about tobacco farmers who depend on this crop for their livelihoods. While the Finance Minister assured Parliament that various schemes exist to support farmers transitioning to alternative crops by citing 1.12 lakh acres shifted away from tobacco cultivation between 2017-18 and 2021-22, this figure reveals more than it resolves.
If only 1.12 lakh acres transitioned over four years, how many acres remain under tobacco cultivation? What happens to farmers for whom crop diversification isn't economically viable or practically feasible? These questions weren't adequately answered. The minister's assurance that "schemes exist" feels empty when the legislation itself could devastate an entire agricultural sector overnight.
Similarly, the government acknowledges 49.82 lakh registered beedi workers across India, where nearly five million people whose employment depends directly on tobacco. Labour welfare schemes are mentioned, but there's no concrete plan for what happens when demand for their product collapses under the weight of these new duties.
When Taxation Becomes Moral Theatre
Trinamool Congress MP Sagarika Ghose raised perhaps the most provocative point that will higher taxes actually reduce consumption? Her doubt deserves serious consideration. If taxation alone could solve public health crises, we'd have eliminated alcohol abuse and obesity long ago.
Ghose highlighted the glaring contradiction in the government's approach to aggressive taxation of tobacco products while remaining clearly silent on pan masala advertisements featuring celebrities. If we're genuinely committed to public health, why do Bollywood stars continue promoting products that contain tobacco or tobacco-like substances on prime-time television?
This reveals taxation for what it often is a politically convenient moral theatre. It's easier to raise taxes than to confront powerful advertising industries, regulate celebrity endorsements, or invest in comprehensive tobacco cessation programs that address addiction as a medical condition rather than a moral failing.
AAP MP Sandeep Pathak argued that excessive taxation isn't a solution to curbing tobacco use is a position that deserves more attention than it received. Addiction doesn't respond simply to price signals. Heavy users will find ways to afford their habit, potentially turning to unregulated or counterfeit products that pose even greater health risks.
The Revenue Question
There's another dimension nobody wants to acknowledge openly, that the government's fiscal dependency on tobacco revenues. Even as we raise duties to discourage consumption, we're simultaneously increasing the revenue we extract from each unit sold. This creates an awkward incentive structure where the government benefits financially from continued tobacco use, even as it claims to discourage it.
The minister assured that these higher duties will be shared with states which is an important detail given India's federal structure. But it also means state governments now have a vested interest in tobacco revenue continuing to flow, even as they're expected to implement public health measures reducing consumption.
What Real Public Health Intervention Looks Like
If we're serious about reducing tobacco consumption, we need more than taxation. We need accessible cessation programs, strict advertising regulations that don't exempt pan masala, public education campaigns that go beyond fear-mongering, and alternative livelihood programs for tobacco farmers and workers that actually work.
AIADMK's M Thambidurai called this "timely and necessary reform," but reform implies systemic change. What we have is a blunt instrument, which is taxation to be applied without the complementary policies that would make it genuinely effective.
The legislation amending the Central Excise Act, 1944 has passed. Tobacco will become significantly more expensive. Some people will quit or never start. But many won't, and we'll have failed both public health and the vulnerable communities caught in tobacco's economic web. That's not reform. That's just taxation with good intentions.
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