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#022 IndiaтАЩs long-ignored tobacco tax system just got a hard reset, exposing the gap between health intent, revenue addiction, and political
The government taxes cigarettes at 40% GST but taxes bidis at 18% GST.
The middle class and upper middle class mostly smoke cigarettes? This section of Society already pays a high income tax. The government is taxing it more.
The government is technically making it difficult to let the people who smoke cigarettes to blow off steam not do that, or perhaps not that often.
It is making them less productive. People who want to still smoke buy single sticks of cigarettes instead of a packet as they are sold cheaper than the packet rate. There are already restrictions on public smoking. So, they have to go to tapris to smoke. Now, they will go more frequently and disrupt work more often.
The government seems to be defining vices for the income tax paying class. The rich can still afford to buy a packet of cigarettes. The poor and lower middle class have bidis. If the middle class also opts for bidis, it is a poorer health choice.
Bidis are taxed at 18% just like consumer durables, electronics, and professional services are.
The stocks of these companies which the income tax paying class owns have also dropped at the same time. So, more losses to a tax paying person who smokes and owns stocks of these companies.