Tobacco Board urges finance minister Nirmala Sitharaman to revisit tax hike in interest of farmers, workers – The Times of India

File photograph: Union finance minister Nirmala Sitharaman

NEW DELHI: Tobacco Board, below the executive management of the Division of Commerce, has written a letter to finance minister Nirmala Sitharaman highlighting the opposed impression of the unprecedented enhance in excise duties on cigarettes on the business, in addition to on thousands and thousands of farmers and workers.The excise hike efficient February 1 has resulted in a worth enhance of up to 60 per cent in actual phrases.Steep tax will increase heightened threat of accelerated illicit cigarette commerce, which has emerged globally as a critical financial and governance problem.

The unregulated market deprives governments of substantial tax revenues, undermines professional companies, fuels organised felony networks, and poses dangers to public well being and safety.“Contemplating the pressing business state of affairs and the numerous impression on the farming group, I request you to intervene and revise the extreme responsibility charges on tobacco merchandise,” Tobacco Board Chairman Yashwanth Kumar Chidipothu mentioned in a letter dated February 10.The chairman, who can be a senior BJP chief, said that he was writing on behalf of FCV (Flue-Cured Virginia) tobacco farmers who had approached it to specific their critical issues over the tax hike.He additional reiterated that, as reported in the media, farmers have begun staging protests and submitting representations to their respective Members of Parliament.“Excessive tax and worth differentials create robust incentives for smuggling, notably when enforcement capability is constrained. Weak border controls, fragmented oversight, and the absence of efficient monitoring and tracing mechanisms enable illicit operators to exploit coverage gaps, whereas illicit cigarettes more and more function a conduit for organised crime and cash laundering,” he mentioned.The penalties lengthen past income loss, with world proof suggesting that billions in excise and tax revenues are diverted yearly to the illicit financial system, lowering funds obtainable for public companies, the consultant mentioned.On the similar time, professional producers face shrinking market shares, job losses, and plant closures, whereas customers are uncovered to merchandise that bypass well being laws, lack age-verification safeguards, and are sometimes linked to different unlawful items reminiscent of counterfeit cigarettes, illicit vapes and nicotine pouches, he added.The Tobacco Board Chairman burdened that addressing the illicit cigarette commerce requires a balanced and coordinated coverage strategy, together with strengthened enforcement, efficient monitor-and-hint programs, coherent and enforceable laws, and enhanced worldwide cooperation.“The unprecedented enhance in excise duties on cigarettes has created critical misery throughout the tobacco worth chain, affecting thousands and thousands of farmers, workers and small outlets who rely upon this sector for his or her livelihoods,” he mentioned.The tax hike is predicted to severely depress farmer incomes, because the authorized cigarette business, the first home purchaser of FCV tobacco, is probably going to sharply curtail its offtake, he mentioned, including, this would depart farmers unable to recuperate even the fundamental value of cultivation, at present estimated at round Rs 200 per kilogram.“There’s widespread concern that market costs might collapse, pushing farmers into acute and doubtlessly irreversible debt. Farmers level out {that a} 22 per cent tax enhance in 2014 resulted in a worth decline of Rs 20 to 30 per kilogram,” he mentioned.