Extra excise tax on packet tea angers planters

Extra excise tax on packet tea angers planters

Kochi: Tea planters across India are opposing the recommendation of the committee headed by O.P. Arya, additional secretary in the commerce ministry, to impose an additional excise duty of Re1 on packet tea to drum up funds to subsidize health, drinking water and education in the plantation sector.

Planters said tea gardens are already bearing the burden of providing social facilities to workers and an additional tax will affect the industry because it will eventually be passed on to the consumer.

In March, the Union government had formed the committee to look into the Plantation Labour Act and social security provisions. The committee’s goal is to streamline applicable laws for the development of the tea industry. The other members of the committee include Tea Board chairman Basudev Banerjee, plantation and labour secretaries from each of the tea-growing states of Assam, West Bengal, Tripura, Kerala, Tamil Nadu and Uttarakhand, as well as a labour representative member of the Tea Board.

The report, submitted in September, said that around 1,28,000 small tea growers and 17,000 medium and big tea enterprises are directly involved in the tea planting activities. The livelihood of around 1.3 million workers and their families depends on the industry. It acknowledges that there is a heavy burden on the large tea estates to provide adequate social security cover to the workers, as mandated by the Act. The estate owners provide social support to their employees by helping out with housing, sanitation, medical and education. Collectively, the cost of social support translates into Rs3.44 per kg of tea in South India and Rs4.12 per kg in North India averaging about Rs4 for the country.

The average price of tea is about Rs70 per kg in the North and Rs45-50 in the South.

“The impact of social costs in percentage terms works out to about 5-8%," the report said. “The profitability of the industry at the current level of prices both in the local and international markets does not provide the way to meet this cost."