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KATHMANDU, June 2: The government has failed to curb tobacco consumption by increasing excise duty as intended. Organizations working to control tobacco use, along with experts and the Ministry of Health and Population, urged the Ministry of Finance to raise taxes on tobacco products based on evidence.
They recommended increasing the excise duty by 30 to 60 percent to meet World Health Organization (WHO) standards. However, during Thursday's budget speech, Finance Minister Bishnu Paudel announced only a minimal 3 to 5 percent increase in excise duty on tobacco products.
Dr Jayakumar Gurung, a researcher at the Nepal Development and Research Council, said MPs clapped when they heard the word "increase," without grasping the real issue. "Excise duty doesn't count as significantly increased unless it rises by at least 10 percent," he said.
Sale of tobacco products banned in Biratnagar
The government has currently raised the excise tax on the most-sold 75 mm and 85 mm cigarette brands by Rs 153 per 1,000 sticks.
This hike translates to just a 20-paisa increase per cigarette. Gurung argued that expecting such a minimal hike to reduce consumption is logically flawed. According to the World Health Organization, only a 75 percent increase in excise duty on tobacco products effectively lowers consumption and aids control efforts.
Dr Bhakta Bahadur KC, spokesperson for the Ministry of Health and Population, said the government ignored the ministry's written recommendation to raise the tax by at least 40 percent. He emphasized that the current level of tax increase will neither reduce tobacco use nor boost revenue.
He explained that a 40 percent tax hike could reduce tobacco users by 6 to 7 percent. Likewise, only a 60 percent increase could raise revenue from tobacco products to an estimated Rs 50 billion. However, the government failed to act on either front. "We communicated our recommendations both in writing and verbally, but it seems policymakers either didn't listen or didn't understand," KC said.
Dr Gurung accuses the tobacco industry of influencing the government once again under the pretext of a tax increase, with the government showing leniency towards the tobacco industry. "The government increased the tax minimally this time, and it announced in the budget speech that it would reopen the Janakpur cigarette factory, which closed ten years ago—this is a wrong step," he said.
He explained that reopening the cigarette industry will affect two areas. On one hand, the industry will incur losses despite spending millions and years of effort to revive it. On the other hand, it will harm public health. He alleged that this year's budget favors the tobacco industry while opposing public health. "The government acts under the influence of the tobacco industry. By making decisions that benefit the industry while ignoring public health, human rights, and environmental justice, it betrays the nation," he said.
