FCTC Article 6 Seeks Undue Tobacco Taxation

Article 6 of the FCTC focuses on price and tax measures to reduce the demand for tobacco products. The WHO and individual NGOs continue to call for extreme fiscal measures such as global benchmark tax levels (i.e. 70% of excise tax level, 75% total tax incidence), earmarked tax and the introduction of other ‘innovative’ tax policies.

One size does not fit all when it comes to tobacco taxation policy. When deciding on taxation, each country needs to take into consideration its own circumstances and objectives to ensure the best results and also to avoid negative consequences and disruptions.

Global or regional tax benchmarks can lead to negative outcomes, such as the growth in the illegal, unregulated and untaxed market which will as a result have a negative impact for the Indian growers.

Countries need to maintain their national fiscal sovereignty to determine the appropriate excise tax levels. FCTC Article 6 guidelines respect the sovereign right of governments to determine fiscal policy and do not contain any explicit recommendation when it comes to excise tax levels.

Tobacco taxation is an important issue for growers as it will have an effect on tobacco price and could have a negative impact on the livelihoods of the tobacco growers in India.

The Government should retain fiscal sovereignty when setting taxation policies and should refrain from increasing cigarette taxes further in order to stabilize the domestic tobacco market and provide the much-needed relief to the distressed FCV tobacco farmers in the country by combatting the surging illegal cigarette trade.

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