Dilemma of Beedi

Swaminathan S Anklesaria Aiyar's today's TOI column presents a hell of a dilemma.

We have a huge fiscal deficit (Swami says). So Pranab-da must think of taxing what isn't taxed hitherto. Why not tax beedis?

Indians consume an estimated one trillion beedis per year, against only 106 billion cigarettes. So, taxes on cigarettes leave out 90% of smokers. You must equalise taxes on beedis and cigarettes. If you equalise at the rate for non-filter micro cigarettes, you will get an additional Rs 15,000 crore per year. And if you equate at the standard filter cigarette rate, you will get an additional Rs 80,000 crore a year. A bonanza!

Aiyar also tells you why beedis aren't taxed: beedi industry employs millions of people. Most of them very poor. People who smoke them too are poor. So the industry is protected.

Aiyar then argues that beedis also contribute, in a big way, to tobacco-related ailments. Since beedis come cheap, more of them are smoked. Moral of the story: tax beedis.

I would not be as definitive as Aiyar. The problem presents a very tough dilemma. Who do you plump for? The poor who die of beedi-addiction, or the poor who keep the wolf away by rolling them?

And most beedi workers live in tribal belts. It's a naxal country. If they were to lose jobs, what would be the consequence?