Revisiting the tax treatment of bidis in India.
economics
public policy
taxation
Journal
Tobacco control
ISSN: 1468-3318
Titre abrégé: Tob Control
Pays: England
ID NLM: 9209612
Informations de publication
Date de publication:
05 2022
05 2022
Historique:
received:
29
06
2020
revised:
22
09
2020
accepted:
01
10
2020
pubmed:
18
12
2020
medline:
26
4
2022
entrez:
17
12
2020
Statut:
ppublish
Résumé
Bidi use remains an intractable public health problem for India. This is partly due to the informal nature of the bidi supply chain, including tax exemptions for small producers. The aim of this paper is to assess the impact of making all bidis subject to duty and Goods and Services Tax. Although this may require legislative changes and incur some extra administrative costs, the net benefits would include greater oversight of the supply chain as well as increased tax revenues and reduced consumption. We use a form of gap analysis (the difference between duty paid and total bidi consumption) to estimate the number of tax-exempt bidis. We then use local evidence on the price elasticity of demand for bidis to assess the impact of eliminating these exemptions on the price and consumption of presently tax-exempt bidis. Total bidi consumption is estimated at 400 billion sticks per annum, including 275 billion duty paid sticks and 125 billion duty exempt sticks. Removing the small producer exemptions would increase the price of currently exempt bidis by INR4.6/pack. Total bidi consumption would decrease by 6% and the number of smokers would decrease by 2.2 million adults. This would bring the rate of bidi smoking down from 7.7% to 7.5%, while generating INR14.8 billion in tax revenues. Eliminating India's tax exemptions for small bidis producers would make a significant contribution to tobacco control, both directly by reducing the number of smokers and indirectly by plugging a loophole in the supply chain.
Sections du résumé
BACKGROUND
Bidi use remains an intractable public health problem for India. This is partly due to the informal nature of the bidi supply chain, including tax exemptions for small producers. The aim of this paper is to assess the impact of making all bidis subject to duty and Goods and Services Tax. Although this may require legislative changes and incur some extra administrative costs, the net benefits would include greater oversight of the supply chain as well as increased tax revenues and reduced consumption.
METHODS
We use a form of gap analysis (the difference between duty paid and total bidi consumption) to estimate the number of tax-exempt bidis. We then use local evidence on the price elasticity of demand for bidis to assess the impact of eliminating these exemptions on the price and consumption of presently tax-exempt bidis.
FINDINGS
Total bidi consumption is estimated at 400 billion sticks per annum, including 275 billion duty paid sticks and 125 billion duty exempt sticks. Removing the small producer exemptions would increase the price of currently exempt bidis by INR4.6/pack. Total bidi consumption would decrease by 6% and the number of smokers would decrease by 2.2 million adults. This would bring the rate of bidi smoking down from 7.7% to 7.5%, while generating INR14.8 billion in tax revenues.
CONCLUSIONS
Eliminating India's tax exemptions for small bidis producers would make a significant contribution to tobacco control, both directly by reducing the number of smokers and indirectly by plugging a loophole in the supply chain.
Identifiants
pubmed: 33328265
pii: tobaccocontrol-2020-056056
doi: 10.1136/tobaccocontrol-2020-056056
pmc: PMC9046750
doi:
Types de publication
Journal Article
Langues
eng
Sous-ensembles de citation
IM
Pagination
432-437Subventions
Organisme : World Health Organization
ID : 001
Pays : International
Informations de copyright
© Author(s) (or their employer(s)) 2022. Re-use permitted under CC BY-NC. No commercial re-use. See rights and permissions. Published by BMJ.
Déclaration de conflit d'intérêts
Competing interests: None declared.
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