Seeking to arrest tobacco use, a civil society group has sought slapping of a discriminatory profit tax on ‘bidi’ makers who have hitherto escaped paying duties.
The existing taxation system exempts manufacturers producing less than two million bidis a year from payment of excise duty, the Voluntary Health Association of India (VHAI) said on Thursday, while releasing a study ‘Political Economy of Smoking Tobacco in India’
The document acknowledges that bidi and cigarettes, being different in terms of capital intensity, job contracts, skill profile and other production and distribution linkages, need to be treated differently in terms of policy prescription.
However, the multiplicity of tax slabs on cigarettes based on length must be abolished and the highest slab be made applicable for all segments. It also sought doing away with the distinction between hand-made and machine-made bidis for tax purposes, since both are equally harmful.
VHAI also pointed out that tobacco industry accounted for around 1.1 per cent of the country’s GDP in 2005-06.
Arguing against the notion that such a tax would harm the labour industry, the study finds that wages per worker in the tobacco industry is one of the lowest amongst all industries and stands at Rs. 17,898 per annum.
“These workers can easily be brought under the NREGA or some better alternative found for them,” said Prof. Amit Shovan Roy, Principal author of the study, and professor of economics at the Jawaharlal Nehru University.
Any alternative employment scheme should take into account the preference of women labourers or workers who would be bearing the brunt of the decline of the bidi industry in a major way, Prof. Roy said, while releasing the study.
Keywords: VHAI, excise duty, bidi,
