Nepal committed to gradually increasing taxes on tobacco products, in line with World Health Organization's call for raising such taxes to decrease tobacco use, nation's finance minister says

KATHMANDU, Nepal , June 18, 2014 () – Finance Minister Ram Sharan Mahat today said that the government is committed to gradually increasing tax on tobacco products, in line with the World Health Organisation's call for raising taxes on tobacco to decrease tobacco use.

On May 31, WHO's Regional Office for South-East Asia, New Delhi, had urged countries to raise taxes on tobacco to decrease tobacco use, especially among the youth.

"The government is increasing tax on tobacco every fiscal year to invest more budgets in primary healthcare system. A certain amount of revenue collected from tobacco products is invested in health facilities, as a result of which there has been decline in maternal and child mortality rate. This policy not only helps us reduce the consumption of tobacco products but also increases investment in health," Mahat said at an interaction titled 'Progressive Tax Increase in Tobacco Products'. The programme was organised by Resource Centre for Primary Health Care.

"Though the government is increasing tax in tobacco products on an average of six per cent every fiscal year, it is not on par with the inflation rate (10 per cent). Therefore, we have enough places to consider additional tax increase. It will also help us increase share of tax from tobacco products which account for only 0.53 per cent of the Gross Domestic Product," Mahat added.

Tax share in retail price of cigarettes has increased between 2009 and 2013 in countries such as Bangladesh (from 67 per cent to 71 per cent), Maldives (30 per cent to 49 per cent), Nepal (25 per cent to 35 per cent), Sri Lanka (72 per cent to 74 per cent), and Thailand (64 per cent to 70 per cent). Maharaj Koirala, Director at the Inland Revenue Department, informed that the government collected Rs 9.07 billion in revenue from tobacco products in the fiscal year 2013/14. Of them, Rs 5.36 billion was excise tax, Rs 1.68 VAT and Rs 2.03 billion income tax. In the current fiscal year, Rs 400 million was allocated to the Health Tax Fund.

According to the Nepal Demographic and Health Survey, 2011, a major concern for the government of Nepal is the effect of secondhand smoke. SHS has a greater risk factor for children and adults who do not smoke. Forty percent of households are exposed daily to SHS, and rural households (42 per cent) are more likely to be exposed than urban households (26 percent). Tobacco use is more common among Nepali men (52 per cent) than women (13 per cent). Thirty percent of men smoke cigarettes, while 38 percent consume other forms of tobacco.

Shanta Lal Mulmi, Executive Director of RECPHEC, said there was an urgent need to hike taxes on tobacco.

Smoky facts

* 40 per cent of households are exposed daily to second hand smoke

* Rural households (42 per cent) are more likely to be exposed to SHS than urban households (26 per cent)

* Tobacco use is more common among Nepali men (52 per cent) than women (13 per cent)

* 30 per cent of men smoke cigarettes, while 38 per cent consume other forms of tobaccot

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