GST Council urged to levy COVID-19 cess on tobacco products, to generate Rs 50,000 crore

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Public health groups along with doctors and economists have urged the GST Council to levy a special COVID19 cess on tobacco products to raise the revenue needed to contribute to funding the COVID19 stimulus package. The health groups, doctors, and economists have appealed to the GST Council for a COVID cess on cigarettes, bidis, and smokeless tobacco products that can provide revenue of Rs. 49,740 crore which can cover about 29% of the stimulus package.

They said the imposition of COVID cess on all tobacco products will not only help raise the much-needed revenue to fund the stimulus it will also prevent the further spread of the virus, especially amongst vulnerable populations by making tobacco products unaffordable and forcing them to quit. Based on studies conducted in several countries, smokers and smokeless tobacco users may be at greater risk for severe illness when confronted with COVID19 since it attacks the lungs and behaviors that weaken the lungs put individuals at greater risk.

COVID19 appears to be one of the biggest economic shockers India may have ever experienced. Immense financial resources will be needed for the government to repair the damage caused by this pandemic. The Government of India has announced several stimulus measures, including mega Rs. 20 lakh crore package, to revive the economy and to make India self-reliant.

Among other programmes, in March, the government also announced Rs. 1.7 trillion ($22.6 billion) economic stimulus package providing direct cash transfers and food security measures to relieve millions of poor Indians hit by the nationwide lockdown over COVID19. According to economist & health policy analyst, Dr. Rijo John: “Unprecedented financial resources will be needed for the country to recover from the economic shock COVID has created.”

“Even though imposing additional taxes on the general public might not be a viable policy option when consumption needs to be boosted, special COVID cess on tobacco could be a win-win step as it will discourage tobacco consumption and reduce COVID related risks while generating revenue,” he said. “Rs. 1 COVID cess per stick of bidis and significant tax increases on cigarettes and smokeless tobacco products are expected to generate additional tax revenue to the tune of Rs. 50,000 crore,” he added.

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