Back to Search
Start Over
Revisiting the tax treatment of bidis in India
- Source :
- Tobacco Control. 31:432-437
- Publication Year :
- 2020
- Publisher :
- BMJ, 2020.
-
Abstract
- BackgroundBidi 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.MethodsWe 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.FindingsTotal 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.ConclusionsEliminating 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.
- Subjects :
- Adult
Price elasticity of demand
Consumption (economics)
Health (social science)
Public economics
Supply chain
Smoking
Tobacco control
Commerce
Public Health, Environmental and Occupational Health
India
Public policy
Legislature
Tobacco Products
Taxes
Tobacco Use
Tax revenue
Goods and services
Humans
Business
Subjects
Details
- ISSN :
- 14683318 and 09644563
- Volume :
- 31
- Database :
- OpenAIRE
- Journal :
- Tobacco Control
- Accession number :
- edsair.doi.dedup.....399a6b17cef1107508194ca6097875f1