It is argued that government should ensure that all tobacco products, including bidis and smokeless tobacco, are taxed at the highest rate of the Goods and Services Tax. Discuss the rationale behind this argument.

Tobacco usage is an age old habit in India. It is estimated that economic cost of tobacco usage is almost 1 lakh crore per year in the country. It includes bidis,cigarrates and other smokeless tobacco products.

With GST approved by parliament it is set to bring the uniform tax structure through out the country. With the GST there is opportunity for selectivity and discretion. GST council has decided the tax rate to be 28% for demerit goods such as tobacco products.

Why high taxes are better:

  1. With the high taxes, high prices for tobacco products. This might discourage the tobacco usage
  2. At the same time revenue generation for the government will be increased which can be used to create alternative avenues for the bidi workers
  3. Preventing the poor from taking the tobacco there by saving their expenditure in health issues caused due to tobacco
  4. To show India’s commitment  to the WHO Framework Convention on Tobacco Control which encouraged the countries to control the tobacco use


  1. One big draw back is poor people who dependent on bidi making,cigarette and other tobacco industries  will lose their jobs

Way forward:

Making sure the lost jobs are compensated , creating and spreading the bad effects tobacco in any form even in bidis , enforcing the rules strictly to control smoking in open places in rural and urban areas and higher taxes will definitely will prevent people from using tobacco products. The more the healthy India the more the prosperous it will be.

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