'Against federalism': Opposition against Bill to levy cess on pan masala units

New Delhi, Dec 8 (PTI) Opposition members on Monday opposed the Health Security se National Security Cess Bill in the Rajya Sabha, saying it is against the spirit of cooperative federalism and will deprive state governments of funds to maintain health infrastructure.

The Bill has provisions allowing the Centre to levy a special cess on pan masala manufacturing units.

During the debate, Opposition parties, including Left, Shiv Sena (UBT), and IUML, opposed the bill in the Upper House, saying it is anti-federal.

Sandosh Kumar of CPI said states like Kerala are getting multiple financial shocks on one side, while financial concentration is happening in the hands of the Union government.

"This is continuously happening and this new bill introduced by the FM is another addition to that motto of the Modi government," he said, asking whether the ruling BJP believe in the federal structure? Kumar said health is a state subject and the finance minister "was kind enough to declare in the Lok Sabha" while replying to the debate on this Bill last week that "they are going to introduce certain schemes to the states as if states are under the generosity of the Union government".

The Health Security se National Security Cess Bill, 2025 should have a clear-cut provisions for the states, he said.

"Health is the main area of states. So, how are you going to provide enough funds to them? There are many schemes, schemes under the control of the central government. And if you fail to implement one or two criteria, then this fund will be lost. This is continuously happening. So, I request to come up with clear-cut policies to help the states," he said.

Kumar further said that the government has no idea of pan-masala units in the country.

"Do they have any rough idea of these kinds of units in our country? In her opening remarks, she (FM) did not say anything about it. I think with this new legislation, this business, of course, a sin business, will be concentrated more in the hands of a few monopolies," he said.

Priyanka Chaturvedi of SS (UBT) said health and law & order is with the state government under federal structure and tax is coming in cess that goes to the central pool, which is not divisible and is anti-federal in nature.

"The FM has assured the state governments in her speech that for health and law & order, they would receive their share from the collection from this cess," she said.

However, what would be the percentage and formula for such distribution is neither mentioned in the Bill nor are state governments aware about it.

She added that 90 per cent of the tobacco products are consumed in the country through illegal beedi and khaini tambaku, which will not come under this Bill.

Haris Beeran of IUML said Section 7 of the Bill says cess shall be levied for the purpose of meeting expenditure for public health, which comes under list II of the Indian constitution, a state subject.

"Now, if this particular Act says, which is a state subject, then how does this particular house have got the competence to legislate on this particular subject?" he asked.

This Bill is actually targeting the public health, which is a state subject, he added.

"They are titling this under Article 270 as a cess. If it is a cess, they don't have to give the shares to the state government. So, they are pocketing the entire thing," he said, adding, "So, states will have to manage the public health, but entire money will be collected by the central government, is the essence of this particular legislation, which, according to me, is a blot on cooperative federalism." Sangeeta Yadav of the BJP said pan masala is dangerous for society as it is spreading mouth cancer. Moreover, it is also a burden on the health infrastructure. This industry has very high profit and has leakage of tax, and the government is taking right steps, Yadav said.

Kartikeya Sharma, an independent member, supported the Bill and said it is not for tax collection but a long-term investment on health infrastructure.

"This is a balanced approach as it is going to tax products which cause oral and throat cancer for health purposes. Prevention, detection and treatment address all three altogether," he said, suggesting "Alcohol should also be added in this." R C Vaddiraju of the BRS and BJP members Maya Narolia, Dhananjay Bhimrao Mahadik, Kavita Patidar and Bhim Singh also participated in the discussion. PTI KRH MSS KRH TRB TRB