GST Council urged to levy COVID-19 cess on tobacco products

Public health groups and economists have appealed to the GST Council to levy a special COVID-19 cess on tobacco products (like the one that was first levied by the State Government of Delhi on sale of liquor) to raise the revenue needed to contribute to funding the COVID-19 stimulus package.

According to reports, revenue collected from the sale of cigarettes, bidis, and smokeless tobacco products is projected to provide a revenue of Rs. 49,740 crore. This amount equals to nearly 29% of the COVID-19 economic stimulus package. The imposition of COVID cess on all tobacco products can help raise the revenue to fund the stimulus package but will also have two additional benefits.

A corona tax will prevent further spread of the coronavirus, specifically amongst vulnerable populations since smokers and smokeless tobacco consumers are much more likely to contract the virus because of a weaker immune system and lungs. Additionally, if the tobacco products become unaffordable, a significant chunk of the tobacco consuming population will be forced to quit the habit. Although the imposition of additional taxes might not be favourable, a special COVID cess on tobacco could be beneficial as it will discourage tobacco consumption and reduce COVID related risks while simultaneously generating much-needed revenue.