High Tobacco Taxes Have Little Effects

The tobacco industry’s benefits and taxes imposed by the government in 2009 achieved 513.11 billion yuan, 55.93 billion yuan more than 2008, the State Tobacco Monopoly Bureau spokesman Zhang Xiulian said.

cigarette vending machines in china

Even though the increase of tobacco taxation by the government has raised its financial treasures, it has not so much effect in regulating and reducing public tobacco use.

“The new regulation did not arise in tax price effect. It has little effect on tobacco sales and in this manner has little impact in tobacco control,” said Hu Angang, professor of the School of Public Policy and Management (SPPM) of Tsinghua University.

China is world’s largest tobacco manufacturing country as well as the largest tobacco consuming country.

Statistics show that the number of smoker in China is more than 300 million. And more than 1 million people die of tobacco related diseases ever year. As a result smoking will cost about 186 billion yuan per year in China which is about 1.9% of our GDP.

However, marketing results show that the wholesale, retail prices of majority tobacco products had not changed after the tobacco tax rate revision.

As a result, this tax caused little economic stress on tobacco users. For their lack of motion in giving up smoking, the increase of tobacco tax cannot reach the goal to reduce the smoking rate.

In fact, to increase the price of tobacco by raising the tobacco tax can not only increases the Government’s tax income, but also is the most productive way to reduce tobacco use and smoke rates.

Researches declared that if the tobacco prices increase by 10 percent, then the consumptions will reduce by 4 percent in high-incoming countries and 8 percent in developing countries. Cigarettes tax hike has been proved to be effective also in preventing children from starting to use tobacco products and in encouraging tobacco users to quit smoking.

For example in April 2009, the U.S. government has increased the federal tobacco tax from 39 cents per pack to 1.01 USD. It is considered to be the largest increase in American history. UK has also twice raised its tobacco tax. Also, Ukraine, Iceland, Thailand, Greece and Indonesia have made the decision to increase tobacco taxes.

So, the tobacco tax rate is 40% of the retail price in China which is much lower than the middle level, 65%-70%, of the international tobacco tax. Some scientists believe that China’s tobacco tax still have raising section.

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