Tax Increase In Tobacco Can Help Save Lives

Cigarette smoking has caused a loss of about Rs. 40 billion that incurred in the treatment of tobacco induced diseases and due to loss of productivity and untimely deaths concluded a recent research of Nepal Development Research Institute (NDRI).
If we add the damage done by the non-smoking tobacco items, the amount could be much higher, said NDRI Executive Director Dr. Jaya Kumar Gurung at a virtual press meet organised on Thursday to publish the findings of the three-year study.
However, the total revenue collection from the tobacco and related products was only Rs. 18.55 billion in 2020. At the same time, consumers of tobacco products range about 32 per cent of the total population and are continuously growing, said the NDRI.
It suggested increasing tax on tobacco products in order to discourage consumption, including the new beginners, and collect higher revenue.
“Tax on tobacco products in Nepal is only 30 per cent (excise duty 16.18 per cent, value added tax 11.5 per cent and health tax 2.39 per cent) while the World Health Organisation has set a standard of 70 per cent,” concluded the study.
According to it, Nepal has the lowest tax on retail price of the tobacco products in South Asia against 71 per cent in Bangladesh, 68.73 per cent in the Maldives, 66.17 per cent in Sri Lanka, 56.63 per cent in Pakistan and 54.04 per cent in India.
The share of excise duty from tobacco products was 2.54 per cent in 2009/10 which has gone down to 1.82 per cent in 2018/19.
The study has suggested that the increased tax would result in decreased consumption and increased revenue. The move would also help in better public health and help reduce the health expenditure in the long run.
Dr. Gurung said that people tend to increase the consumption of tobacco-related products during difficult times like COVID-19 pandemic which causes more negative impacts on health conditions.
“We would like to urge the government to address the issue through the budget of the next fiscal year 2021/22. The tax on tobacco products should be increased by 50 to 70 per cent and in the next three years, it should be brought to the level of India,” he said.
An increase by 50-70 per cent in tobacco tax would help collect Rs. 8 billion to Rs. 12 billion in a year and reduce consumption by 1.4 per cent to 6.9 per cent, according to the study. It said that about one-fourth of youth in Nepal consume tobacco related products, therefore, retail selling of cigarette should be strictly controlled.
Speaking on the occasion former Minister for Science and Technology Ganesh Shah said that there was a need for launching an anti-tobacco campaign in the country.
Manufacturers of the tobacco products at times present the excuse of employment generation but the government should take a policy deviation in terms of industrial priority since the jobs created by this sector is nominal, he said.
Health Economist Dr. Devi Prasad Prasai said that Nepal loses Rs.18 billion revenue and 1000-2000 lives in a year because of low tax on tobacco.
He also said that the impact of tobacco industry on employment generation is not significant.
“They claim of producing jobs for about 2,000 people in formal sector. This is an insignificant number given the negative impact of tobacco products. Life of about 2,000 people could be saved if the tax-rates are raised. It will also discourage the new users from smoking and chewing tobacco,” said. Dr. Prasai.
Kunj Joshi, Senior Health Administrator at the National Health Education, Information and Communication Centre (NHEICC), said that controlling tobacco products should be the cross-cutting agenda and considered important by all the ministries. This is the only way to control the pervasive use of tobacco products, he said.
The study was jointly carried out by the NDRI, NHEICC, Nepal Health Research Council, Nepal Cancer Relief Society, and Equal Access.