Beedis a bigger killer, tax them like cigarettes

Dear Dr Harsh Vardhan,

You are rightly worried about the health effects of cigarettes. You are campaigning for much higher taxes to deter cigarette smoking, a ban on the sale of loose cigarettes, and a ban on e-cigarettes. You want three-quarters of every cigarette pack to be covered with health warnings.

Very good, but there is a glaring omission in your crusade. Why don’t you and other politicians crusade against beedis too, which are infinitely bigger killers than cigarettes? In 2009, Swaminomics explained that Indians consume one trillion lightly taxed beedis per year, against 106 billion highly taxed cigarettes (both figures will be higher today).

Why focus only on the 10% smoking cigarettes? Why not equalize taxes on beedis and cigarettes? At the time, I calculated that equalizing the tax on beedis to the rate for nonfilter micro cigarettes, would yield an additional Rs 15,000 crore per year. And if the beedi tax was equated with the standard filter cigarette rate, it would yield an additional Rs 80,000 crore a year. This would provide huge revenues to slash the fiscal deficit and finance important health-related measures like the Swachh Bharat scheme.

Needless to say, my column of 2009 was ignored. The most obvious reason was that a prominent Cabinet minister, Praful Patel of the National Congress Party, was one of India’s biggest beedi manufacturers. But he is now gone. So why not stop this traditional hypocrisy of lambasting cigarettes while keeping silent about beedis?

The big reason is, of course, that the beedi is the poor man’s smoke, and the beedi industry employs millions. So what? These are horrifying reasons for justifying huge tax breaks for proven killers. The poor want low prices, but is a cheap killer like the beedi the solution? Are you worried only about the health of richer folk, who smoke cigarettes? Dr Prabhat Jha of Toronto University estimates that 930,000 Indians die annually of tobacco-related diseases. His research reveals that smoking even a few beedis per day is harmful. Global experience shows that people give up smoking when high cost and social inconvenience provide proper incentives. Around 30% of all smokers in the US and Europe have given up the habit. But in India only 2% of beedi smokers ever give it up, because the costs and social pressures are so low.

Politicians say the beedi industry employs millions, and tendu leaves used by the industry provide employment to lakhs of tribals gathering such leaves in forests. But, Dr Harsh Vardhan, can you justify encouraging an industry that kills millions just to provide employment? Surely you can create other, less harmful jobs?

A research study of 2010, ‘The Economics of Tobacco and Tobacco Taxation in India’, concluded that “raising beedi taxes to Rs 98 per 1000 sticks would add Rs 36.9 billion to tax revenues and prevent 15.5 million current and future smokers dying prematurely. Increasing cigarette taxes to Rs 3,691 per 1000 sticks would further add Rs 146.3 billion to tax revenues and prevent 3.4 million premature deaths”.

Another study in 2008 by Emily Sunley estimated that beedis account for 77% of all tobacco consumption but only 5% of excise taxes. She highlighted the fact that the tax per thousand was Rs 14 for handmade beedis and Rs 26 for machine-made ones. The tax break for handmade beedis was supposed to encourage employment, but actually encouraged corruption and misdeclaration of factory-made beedis as handmade ones.

However, even the low duty on handmade beedis was largely evaded by cottage industries producing unbranded beedis. Only 360 billion out of the trillion beedis produced annually paid any taxes at all. Sunley suggested banning unbranded beedis. This could be facilitated by obliging tobacco curers, blenders and processors to file electronic reports on whom they sold tobacco to. If the tax on handmade and machine-made beedis was equalized, this would facilitate a shift in production to machine-made production in factories, where tax collection was easier and evasion more difficult.

Sunley noted that against the tax of Rs 14-26 per thousand on beedis, the tax on cigarettes was Rs 168 for micro nonfilter cigarettes, Rs 819 for standard 70mm filter cigarettes, and a whopping Rs 2,163 for filter cigarettes longer than 85mm. On health grounds, how can anybody justify this wide spread? Clearly, the taxation of cigarettes and beedis is more politics than healthcare.

Dr Harsh Vardhan, if you are to be taken seriously, please extend your campaign to beedis as well as cigarettes. Equalizing taxes on the two cannot be done in one go, but can surely be phased in over five years. And beedi packs should carry the same health warnings as cigarette packs. Don’t favour one killer over another.

What do you think?