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Tax Gutkha, Khaini, Zarda in a Standardised Way to Check its Use: Report

Of the 350 million SLT users worldwide, 68 percent are concentrated in the traditional markets of India (241.5 million) and Bangladesh (30.5 million) making the two countries case studies to establish dos and don’ts for the rest of the world.

Aradhna Wal | News18.com

Updated:April 26, 2018, 8:13 AM IST
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Tax Gutkha, Khaini, Zarda in a Standardised Way to Check its Use: Report
Image for representation. (Reuters)
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New Delhi: According to a new report, unless countries figure out how to tax smokeless tobacco (SLT) products in a standardised manner, they will find it difficult to check its widespread use.

The report — Global Smokeless Tobacco Control Policies and Their Implementation — was brought out by the hub for smokeless tobacco established in India by the WHO Framework Convention on Tobacco Control (FCTC).

The report by the two-year-old global hub, running at the National Institute for Cancer Prevention and Research (NICPR), has taken a look at how all 179 parties of the FCTC manage SLT products.

Of the 350 million SLT users worldwide, 68 percent are concentrated in the traditional markets of India (241.5 million) and Bangladesh (30.5 million) making the two countries case studies to establish dos and don’ts for the rest of the world. By volume, said the report, 91.3 percent (648.2 billion tons) of the SLT products sold worldwide (710.2 billion tons) are sold in traditional markets.

The hub was established in India, in April 2016, because it is both a high-burden country and one that has been working to crack down on smokeless tobacco.

Dr Ravi Mehrotra, the head of NICPR, said that their work had shown that, not just India and Bangladesh, the rest of the world needed to worry about SLT too. For example, SLT use has spread to Scandinavia and North America, in a new generation of products that people believe are a less harmful alternative to cigarettes.

India and Bangladesh have shown that effective taxation can bring down the use of SLTs. For example, a 58 percent increase in the prices of khaini resulted in a 51% decline in its consumption during 2008–2013. A rise in the price of zarda by 28 percent led to a 24 percent decline in the consumption during the same period. The two are the most popular forms of SLT in India.

Taxation, however, is difficult as it is tough to establish a standardised unit for the purposes of pricing or taxing.

The problem, points out the report, also starts with the fact that most countries don’t have a standard definition of SLT — which in India is mostly had in the form of gutkha, khaini, zarda. Out of 179 parties, 135 have included SLT under tobacco products in their laws. Of the 135 parties, 112 have expressly defined SLT either in a general or in an obscure way. And in the case of 44 parties have either not included SLT or their laws were not available in English language. This means that SLT gets left out of policies cracking down on tobacco use, as they are largely concerned with smoking tobacco such as cigarettes.

In 2015-16, the Indian government introduced a new factor in how it taxed SLT — maximum speed of packing machine. Since most chewing tobacco or gutkha, is packed into pouches with machines, manufacturers would often under-report the capacity of their machines or produce beyond the declared capacity. The new way of taxing meant that excise tax revenue from pan masala and chewing tobacco increased by 66 percent and 48 percent, respectively, in financial year 2015-16. In comparison, in FY 2014-15, the excise revenue had seen a decline of 0.4% and 7.8%, respectively.

Such taxation is not only a disincentive for SLT users, it could also help with the increasing medical costs of tobacco. In 2011, said the report, economic costs from all diseases attributable to SLT use for persons aged 35-69 years was Rs 2.33 thousand crore. In comparison, the excise tax revenue collected from SLT in that year amounted to only INR 126 crore.
| Edited by: Aditya Nair
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