ANOTHER ROUND OF CIGARETTE & ALCHOHOL PRICE HIKE. WHY NOT BANT THEM INSTEAD ?

Based on the health assumptions that Cigarette is injurious to health and alcoholism is a social evil, Government is hiking the GST slabs of both. According to the budget notice issued by the Finance Ministry, Centre has identified a dozen of items where GST rates would be increased. Finance Ministry’s greed for more revenue is leading to a MRS NIRMALA SITHARAMAN, WHAT IS YOUR REAL MOTIVE ? TO REDUCE CONSUMPTION BY INCREASING PRICES OR GREED FOR MORE REVENUE ?

Cigarettes and other tobacco products attract a GST of 28%. The total tax burden is up to 53%.

• Now, the Center is considering the increase of GST to 40%. That’s highest slab allowed. Excise duty is included to maintain tax revenue. However, some states do not support this idea.
• The compensation of cigars or cigarettes vary from Rs 2,076 to Rs 4,170 along with taxes levied.
• The Central government’s decision is based on 2 solutions:
• 1. To merge the price with excise tax slab
• 2. Introduce a new type of price
• Before the Central government takes the final decision, the ministerial permission is mandatory
• Tobacco price rise by center is mostly to discourage smokers and motivate them to quit smoking.
• Based on the taxes on cigarettes, the tobacco companies are expected to increase the production prices.

THE CENTER’S MOTIVE IS TO REDUCE ALCOHOL CONSUMPTION MAY JUST BE AN EYEWASH,AFTERALL.

• Alcohol was always exempt GST. There are two important reasons why alcohol or spirits were never part of the GST regime:
• The state governments maintain substantial revenue stream.
• The prices of alcohol is expected to be close to Rs. 90,000 crores every year.
• All this to reduce consumption of alcohol. Alcohol taxation remains under state control. The current structure allows states to optimize revenue from liquor sales, unlike the unified GST slab proposed for cigarettes and other spirit-based products.

Editor’s Note

• If alchohol and cigarattes are sin goods why not ban them altogether? And for how long can the government keep increasing prices of so called Sin Goods recurringly ? Higher prices of liquor may lead to increased consumption of low cost spurious country liquors. Is the government mandated to play the role of moral policing through finance ministry ? What has GST to do with Morality ? What’s to be made next expensive through GST Moral police? Maybe toothpaste ? It has cancer causing components !