Volume 2 Issue 7

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Hike in taxes for cigarettes: Issue of concern

Date of News: 

20-01-2022

Date of Publication: 

10-02-2022

Unique ID:

202281509

Name of the Author: 

Gauri Naik

Field of Law: 

Business Law

Content of News:

The Federation of All India Farmer Associations (FAIFA), which represents commercial crop farmers and farmworkers, has requested that the Union Government not raise tobacco taxes any further. "Any more tax increases would result in a significant decline in FCV production and have a significant impact on the livelihoods of thousands of farmers," the organisation stated. High tax rates have fueled cross-border smuggling of contraband cigarettes, resulting in massive revenue losses for the government. According to the FICCI CASCADE report, the overall economic loss due to cigarette smuggling was Rs 16,138 crore. According to the federation, the volume of contraband cigarettes increased by 44% from 19.5 billion sticks in 2011 to 28.1 billion sticks in 2020. As a result, the country's illicit cigarette market is expected to grow to 27.6% in 2020, up from 21.3 percent in 2015. As a result, demand for FCV (flue-cured Virginia) tobacco has decreased, which has had a negative influence on tobacco crop area and production High Taxation According to the federation, the cost of cigarettes is among the highest in the world due to a high tax rate. "Farmers' interests are being harmed by the drop in interest in legal cigarettes. "Gadde Seshagiri Rao, Ex-Vice Chairman, Tobacco Board and Vice-President of FAIFA, said in a statement that the government must bring a price parity between cigarettes and other forms of tobacco to check the illicit cigarettes market given India's huge and widespread dependence on the tobacco crop for livelihood." The government's strategy of making cigarettes unaffordable through high taxes in order to discourage consumption has jeopardised the livelihood of FCV tobacco growers, according to Murali Babu, the federation's General Secretary.

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