NEW DELHI: Union health minister Harsh Vardhan has sought an increase in tax on cigarettes of all lengths by Rs 2 to Rs 3.5 per stick as well as removal of tax exemption granted to bidi makers, measures that can deter people from smoking by making a puff dearer.In a letter sent on Thursday, Vardhan urged finance minister Arun Jaitley to raise tax on retail price of cigarettes from 45per cent to over 60per cent in the upcoming budget. This, he said, would add Rs 3,800 crore to the government’s revenue and save at least four million lives. Although the previous government had raised tax on cigarettes by about 19per cent in February 2013, the increase was too little to lower consumption, Vardhan said.The revision did not have the desired impact at the time since higher taxes were targeted at longer cigarettes and the industry sought to evade the revised taxes by switching to cigarettes of shorter length.“Raising the proportion of specific tax on cigarettes as a percentage of their retail price from about 45per cent to over 60per cent of the retail price of cigarettes would conservatively lead to about three million smokers quitting and nearly three million children not starting,” Vardhan said, adding that the higher tax burden would be borne mostly by upper income groups.Even with this substantial hike, cigarettes and bidis would remain a very profitable business, Vardhan said. Besides, this would not mean net loss of jobs in bidi industry, the minister said. Admitting that a step like this may modestly swell cigarette smuggling, the minister claimed that reduced smoking and rise in tax revenue would more than compensate for that. “Experience from other countries suggests that the cigarette industry itself promotes smuggling to gain market share and to bolster their argument against higher taxes,” the minister said.The move, if implemented, could hit companies such as ITC , Godfrey Phillips India (GPI) and VST Industries , which together command over 90per cent market share in the country.While public health groups cheered the move, tobacco industry claimed it was already reeling under a high tax burden.Legal cigarettes constitute only 12per cent of tobacco consumed but account for 85 per cent of the excise revenue from tobacco.“Tax rates on cigarettes are 47 times higher than other tobacco products in the country. India has the highest tax rates on cigarettes in the world in relation to per capita income. Unlike other countries where more than 90per cent tobacco consumption is in cigarette form, bulk of tobacco in India is consumed in the form of tax inefficient, cheaper products like chewing tobacco (55 per cent) and bidis (23 per cent),” said SM Ahmad, director at Tobacco Institute of India.Ahmad blamed the shift to illegal cigarettes largely on two steep back-to-back increases in excise duty in the last two budgets coupled with high rates of state VAT and estimated that high and discriminatory tax regime on cigarettes, international smuggled and domestic tax evaded cigarettes cause a revenue loss of over than Rs. 6,000 crores to the national exchequer.Voluntary Health Association of India (VHAI)’s Binoy Mathew said, “This is a first in a series of steps that can lower consumption of tobacco and shows the commitment of the minister towards the cause.”