The Federation of All India Farmer Associations (FAIFA) on Thursday urged the government to roll back an increase in compensation cess rates on cigarettes to revenue neutral rates, as earnings of tobacco farmers have cumulatively shrunk since 2013-14.
According to the association, the tobacco farmers were under extreme duress due to heavy taxation and adverse regulatory environment on the legal cigarette industry.
"During the last six years, the consumption of domestic Flue Cured Virginia (FCV) tobacco has reduced substantially. The excessive taxation on cigarettes has given a huge boost to smuggled cigarettes," the FAIFA said in a letter to the Finance Ministry.
Appreciating the government's efforts focused on agricultural growth and doubling of farmer incomes in the country, the association, however, has said that the plight of tobacco farmers whose earnings have reduced sharply in recent years have been completely neglected and no relief has so far been provided.
"The unintended consequences of steep increases in taxation is demonstrated by the huge growth of illicit trade. We appeal to the Government to roll back the tax increase to Revenue Neutral Levels, consistent with the government's stated objectives. This will help curb illicit trade and increase the demand of home grown tobacco, save our livelihood and arrest further loss of employment opportunities," said Murali Babu, General Secretary, FAIFA.
According to the association, the entire legal cigarette value chain is reeling under pressure of the punitive taxation on account of year on year increase in taxes on cigarettes, which have cumulatively gone up by 202 per cent during the last six years.
This trend has hurt the FCV tobacco farmer, their families and 22 of them have committed suicide.
FAIFA has appealed to the government to take appropriate measures to protect the livelihood and earnings of farmers in the country so that unfortunate incidents of farmer suicides are not repeated in future.