China to Increase Tobacco Tax Again Next Year

To control tobacco consumption and discourage smoking, China will release a plan for continuing to increase its taxes on tobacco consumption next year, the State Administration of Taxation (SAT) told the Chongqing Economic Times.

The Ministry of Finance and SAT increased the consumption tax on tobacco last May, aiming to increase tobacco's retail price and decrease smoking.

During a seminar recently held by the Chinese Association on Tobacco Control (CATC) and Central University of Finance and Economies, experts said increasing taxes on tobacco was the best way to decrease tobacco consumption, but more adjustments to the tax policy are needed.

A survey of 6 cities over the last four years by Jiang Yuan, deputy director of the Chinese Center for Disease Control and Prevention, found previous tobacco tax reforms had little effect because they didn't noticeably change the retail price of tobacco.

Xu Guihua, CATC vice chairman, said both the consumption tax and retail price of tobacco are much lower in China than other countries.

For example, Marlboro's retail price in China is $2.04, compared to $2.69 in South Africa and $11.48 in Norway - 5.6 times higher than in China.

Xu cited World Bank reports showing that a 10-percent increase in tobacco product's retail price leads to a 4-percent drop in tobacco consumption in high-income countries, an 8-percent drop in mid- to lower-income countries, and a 50-percent drop in smoking rates.

Hu Xianming, an SAT official, said the SAT also intends to raise the price of cigarettes and raise taxes on both consumption and the retail price of tobacco, with a detailed plan to be out next year.