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Have a tax rate that disincentivises cigarette smuggling: FAIFA

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The Federation of All India Farmer Associations (FAIFA) on Monday asked the government to haveataxation policy that disincentivises cigarette smuggling in India, ahead of a crucial meeting of the goods and services (GST) Council later this week.

The FAIFA,a non-profit organisation representing farmers across states such as Andhra Pradesh, Telangana, Karnataka and Gujarat, said cigarette smuggling has hit tobacco farmers supplying to legitimate manufacturers in India.It urged Finance Minister Arun Jaitley “to protect the interests of Indian FCV (FlueCured Virginia) tobacco farmers through balanced and uniform taxation under GST”.

“We appeal to the government to haveataxation policy that disincentivises cigarette smuggling in India,” FAIFA General Secretary Murali Babu said in a statement.

He further said GST is an opportunity for the government to ensure illicit trade is eradicated from the country by removing distortions and address tobacco taxation in India.It will bring back lost livelihood opportunities of the tobacco farmers, he added.

FAIFA said a steep increase in excise duty in the recent past has led to growth of smuggling of cigarettes in India due to the high tax arbitrage.

Illegal cigarette trade is more than 20 per cent of the cigarette industry in India, making the country the fourth largest and fastest growing illicit market in the world, it claimed. The FAIFA said cigarette smuggling has hit tobacco farmers supplying to legitimate manufacturers in India

Business Standard New Delhi, 16th May 2017

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