“What does a Finance Minister turn to when he requires resources? The answer is cigarettes. I propose to increase the specific excise duty on cigarettes by about 18 per cent,” Finance Minister, P. Chidambaram said while delivering the Budget speech this month.
Every year, some of the balancing in the Union Budget is done via the pockets of smokers in the country. Last year the then Finance Minister Pranab Mukherjee increased the excise duty on cigarettes by about 10 per cent. Chidambaram has outdone is predecessor by slapping a tax increase of 18 per cent on the average Indian smoker. In India, where many women smoke despite this still being considered a societal taboo and where almost half the male population (47.9 per cent approximately) consume tobacco, the Finance Minister’s plan to “bring down” smoking as a social service by increasing the taxes, has clearly failed.
This leaves me with one small doubt. Chidambaram is working to bring down the number of smokers in the country by increasing the specific excise duty on cigarettes. Why not do the same for foreign cigarettes that are available in the country too? For at least the last four years, I have been witnessing the rocketing of Indian cigarette brands such as Wills Gold Flake and Wills Classic while foreign brands such as Lucky Strike and Marlboro have successfully maintained consistent pricing in the Indian market. When the Finance Minister casually mentions the increase of “excise” duty on cigarettes, he means a price increase of only domestic cigarette brands. Why not increase the rates of customs duty as well for our ciggie imports?
Imported brands
The reason: ITC (India Tobacco Company, previously known as Imperial Tobacco Company), a limited public company and one of India’s most hi-profile private firms, bought the global cigarette brand “Lucky Strike” in 2010. A pack of 20 cigarettes was priced at Rs110 then. A pack of 20 Lucky Strike cigarettes is still Rs 110.
The same is the story for American cigarette brand Marlboro which comes from the Altria Group’s stable (previously, Philip Morris Companies Inc.) which is sold in India by Godfrey Philips India Ltd, which is also a public limited company. Ironically, the same Altria Group that sells Marlboro to India, via Godfrey Philips, also sells English cigarette brand Benson & Hegdes of which Philip Morris International is the owner (the other two being British American Tobacco and Japan Tobacco) to the India Tobacco Company.
Where on one hand, the Government is banning smoking in public areas and increasing the prices of cigarettes to safeguard the “health of the common citizen”, it is also, very strategically, leaving convenient alternatives open. The prices of cigarette brands manufactured within the country itself are hiked each year, but the prices of foreign cigarettes remain the same. The hike on cigarette brands manufactured in and sold within the country will directly influence the profits of Indian companies, and this works in the Government’s favour.
A lot of smokers in India are unaware of this price difference. Wills Classic and Gold Flake (both kings and small) are one of the most commonly consumed cigarette brands in the country.
The health debate
The Government’s plans to reduce the number of smokers in the country by raising taxes has brought them the intended result – more revenue. right where they knew it will. The number of smokers hardly came down, but the profit made from the Indian cigarette companies shot up. What is manufactured in the country, remains in the country and adds to the national GDP. A small packet of Gold Flake (65 mm approximately) is priced at Rs 48, and will definitely be higher once the new tax takes effect. The same packet was available for Rs 32., some six years back. For a packet of cigarettes that small, that rate is just ridiculous. It is not a bad thing for the Government to try to reduce the number of smokers in the country by making them pay up more. Of course, it would only be an entirely good thing to do but only if the Government has its heart in the right place. Which, apparently, it does not.
While claiming to reduce smoking in the country, the Government is only trying to line its own pocket. Where the Government talks about the fact that cigarette prices of the most popular tobacco brands are on the rise, the fact remains that the price of the same commodity when imported has remained the same.
Regular smokers are going to die an early death, and that is a given. But killing them for reasons other than smoking profusely is just cruel.
(Bipasa graduated in English Literature from IP College for Women, Delhi University. She now studies at the Asian College of Journalism, Chennai.)