Health ministry wants you to stub that ‘sinful’ cigarette out! Expect hike in sin tax by 40% in Budget 2016

The healthy ministry and the World Health Organisation (WHO) say prices of tobacco products in India have not increased substantially over time and have, therefore, suggested a hike in taxes up to 40% in all tobacco products in the Budget 2016.

A report by the health ministry and WHO, 'Tobacco Taxes in India: An Empirical Analysis', states that tobacco products have become cheaper than essential food items and there was a need to hike prices.

"The relative wholesale price index (WPI) of all tobacco products (smoking and smokeless) show an increasing trend between 2005-06 to 2012-13, but this has been consistently lower than essential commodities like food items," the report revealed.

But the study does not say about period between 2006 and 2013 and higher taxes imposed on cigarettes over the following two years.

In contrast to the report by health ministry and WHO, the recent National Family Health Survey-4 covering 13 states and two Union Territories mentioned decline in consumption of tobacco products over the last decade.

As per the government, the total economic cost attributable to tobacco use from all diseases in the year 2011 amounted to Rs 1,04,500 crore ($22.4 billion) in India, equivalent to 1.04% of GDP.