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Saturday , April 10 , 2010
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Costly puff to save lives: Report

New Delhi, April 9: Finance minister Pranab Mukherjee may have helped avert 100,000 premature deaths by raising taxes on cigarettes this year, health policy specialists and economists have said, calling for even steeper taxes on tobacco.

A team of experts on Thursday released a report analysing India’s health gains from taxes on tobacco products, describing higher taxes on cigarettes and bidis as “the single most effective intervention to get current smokers to quit”.

The 2010 budget imposed a 17 per cent higher excise tax on cigarettes that translates into a 6 per cent increase in the market price, said Prabhat Jha, a senior health analyst at the Centre for Global Health Research, Toronto, Canada.

The hiked price is expected to prompt about 200,000 of India’s 25 million smokers to quit and prevent about 100,000 deaths of people between 30 and 69 years, he said.

“Mukherjee has saved 100,000 lives,” Jha added.

The report by Jha and a team of economists in India and the US has calculated that increase in taxes on cigarettes and bidis will avert deaths among current smokers, discourage young people from smoking and raise revenues.

Earlier research by Jha had shown that about 672,000 people between the age of 30 and 69 die in India each year because of the harmful effects of tobacco. But studies have shown that quitting before the disease strikes is rare in India — less than 2 per cent of Indian adults are ex-smokers.

“Taxation has been underused as a (tobacco) control instrument in India,” said M. Govinda Rao, director of the National Institute of Public Finance and Policy, New Delhi, another author of the report.

The analysis shows that a 53 per cent increase in bidi prices and a 176 per cent increase in cigarette prices will prevent 6.4 million premature deaths.

Such a level of taxes on these tobacco products will also lead to an extra revenue of Rs 18,000 crore, an amount higher than this year’s outlay for the National Rural Health Mission (Rs 13,910 crore).

The tax component of street prices of cigarettes in India is a low 38 per cent in contrast to the 65 per cent to 80 per cent tax imposed on cigarettes in some developed countries.

The report has calculated that increasing bidi taxes from 9 per cent to 40 per cent of retail price will increase government revenue by Rs 3,690 crore and prevent 15 million premature deaths. An increase in cigarette tax to 78 per cent of retail price will avert 3.4 million premature deaths and raise Rs 14,630 crore as revenue, the report said.

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