Of­fi­cials eye another tax hike for cig­a­rettes

Top health au­thor­ity hopes to force to­bacco in­dus­try to in­crease prices

China Daily (Canada) - - CHINA - By SHAN JUAN shan­juan@chi­nadaily.com.cn

The na­tion’s top health au­thor­ity is push­ing for a hike in the cig­a­rette tax and re­tail prices to curb smoking in China, the world’s largest to­bacco pro­ducer and con­sumer, a se­nior health of­fi­cial said.

Yao Hong­wen, a spokesman for the Na­tional Health and Fam­ily Plan­ning Com­mis­sion, an­nounced the pro­posal at a news con­fer­ence onWed­nes­day.

China last raised its cig­a­rette tax in 2009, but cig­a­rette com­pa­nies didn’t raise their prices.

“The com­mis­sion has been work­ing closely with re­lated de­part­ments to fur­ther raise the tax and the price of to­bacco prod­ucts to bet­ter en­sure pub­lic health,” Yao said.

How­ever, Li Bao­jiang, a re­searcher in the to­bacco econ­omy re­search in­sti­tute of the State Tobac­coMonopoly Ad­min­is­tra­tion, said more re­search and cau­tion is nec­es­sary be­fore rais­ing the tax.

“Is­sues like whether a tax hike would lead to to­bacco trafficking re­main un­clear,” he said.

The to­tal cig­a­rette tax is about 40 per­cent, after an in­crease of 6 to 11 per­cent­age points in 2009, the com­mis­sion said. The World Health Or­ga­ni­za­tion rec­om­mends that the cig­a­rette re­tail tax be at least 70 per­cent of the re­tail price to re­duce to­bacco use.

Not only does China lag far be­hind the WHO stan­dard, the 2009 tax hike didn’t af­fect the cig­a­rette re­tail price at all, said Yang Gonghuan, for­mer head of the to­bacco con­trol of­fice of the Chi­nese Cen­ter for Dis­ease Con­trol and Preven­tion.

“The to­bacco pro­duc­ers sim­ply ab­sorbed the tax hike to main­tain the prices and keep the smok­ers,” she said.

Gan Quan, the China di­rec­tor of the In­ter­na­tional Union Against Tu­ber­cu­lo­sis and Lung Dis­ease, said another tax in­crease on to­bacco prod­ucts would fur­ther squeeze the in­dus­try’s profit.

“They fi­nally would have no other choice but to raise re­tail prices,” he said.

Yao agreed, adding that do­ing so “won’t hurt gov­ern­ment tax­a­tion in­come from cig­a­rettes.”

He cited the ex­am­ple of South Africa, where con­sump­tion fell 30 per­cent after the gov­ern­ment raised the to­bacco tax from 32 to 52 per­cent.

The gov­ern­ment’s tax­a­tion rev­enue in­creased sub­stan­tially at the same time, he added.

“It’s a win-win sit­u­a­tion to curb smoking and in­crease tax in­come,” he said.

Last year, the to­bacco in­dus­try con­trib­uted more than 960 bil­lion yuan ($155 bil­lion) in taxes, ac­count­ing for 8.6 per­cent of the na­tion’s to­tal, the cen­tral gov­ern­ment said.

China has more than 300 mil­lion smok­ers, and more than 1 mil­lion die ev­ery year from smoking-re­lated dis­eases, ac­cord­ing to the com­mis­sion.

A study led by Yang Gonghuan found that by 2010, the di­rect med­i­cal cost of treat­ing smoking-re­lated dis­eases was­morethan 66.4 bil­lion yuan.

She urged the gov­ern­ment to in­tro­duce a fur­ther tax hike to avert the pub­lic health threat that smoking poses.

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