A delegation of FCV tobacco (flue cured virginia) farmers has appealed for a reduction in the tax incidence on legal cigarettes.
At a meeting with Finance Minister Nirmala Sitharaman on Thursday, the members expressed serious concerns over the recent tax hike and its likely adverse impact on the regulated FCV tobacco ecosystem and farmers’ livelihoods.
“The Minister assured that the government will consider the points raised by the farmers and stakeholders,” a member of the delegation said in a statment.
“She also assured that the government’s approach will be revenue-neutral, while taking into account the impact on farmers, trade and the regulated ecosystem. She further stated that the government is not looking to generate additional revenue from the tobacco sector,” the statement said.
Farmers said the tax hike may drastically reduce domestic consumption, leading to sharp price declines, accumulation of unsold stock and reduced buying interest from traders. They also warned that sudden tax shocks had historically encouraged illegal and smuggled products.
The delegation included farmers’ representatives, Tobacco Board Chairman Yashwanth Kumar Chidipothu and Member of Parliament from Andhra Pradesh Daggubati Purandeswari.
The farmers explained that auction prices had already declined by nearly 10 percent, and they had received information that, February, 1 onwards, traders may not participate in the auctions due to the 18 per cent tax on unmanufactured tobacco.
Source: The Hindu businessline
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