WHO urges tax hike on tobacco

Cigarette Smoking

China’s cigarette tax rate continues to be among the lowest all over the world, and the authorities must boost it to help control a smoking epidemic that affects more than 300 million people in China, based on the World Health Organization.

Around half of Chinese smokers pay 5 yuan (80 US cents) or less on a pack of 20 cigarettes, which is “much, much lower than the regular cost in developed countries,” said Angela Pratt, technical officer of the Tobacco Free Initiative in the WHO office in China.

In accordance with the book, which was first released in 2010, overall cigarette taxes make up about 50% of the mean retail price for cigarettes at the global level, with the mean price of a cigarette packet being $2.53. The countries with lower-middle-income have both lower cigarette prices and lower rates of cigarette taxation.

The excise tax rate in China represents 36% or 56% for cigarettes with different factory costs, official statistics demonstrate.

China is viewed as a country with middle revenue, but the cost of its tobacco products fits more into the group with lower-middle-income.

Additionally, information from the WHO demonstrates that the mean annual per capita revenue demanded to buy 100 packets of the least expensive cigarettes in China has slipped from 14% in 2000 to 3% in 2010.

WHO has suggested that at least 70% of the retail price of cigarettes sourced from excise taxes to effectively reduce tobacco consumption, yet it says the excise tax makes up only about 25% in tobacco’s retail price in China.

In 2009, Chinese government increased cigarette taxes by at least 6%, mainly on relatively high-priced brands.

“But that increase did not have an effect on cigarette retail prices, especially the low-end brands, as cigarette makers decided to absorb the tax hike to maintain consumers,” she said.

Liang Ji, associate professor of the Research Institute for Fiscal Science under the Ministry of Finance, said that there is a lot of room for further tax increases.

To address that, Liang proposed the taxation authority keep increasing the tax to squeeze the profit margins of cigarette makers as much as possible until they boost retail prices.

China established a State monopoly of the tobacco industry in the early 1980s, and it now creates more than 2.3 trillion cigarettes annually, making up about 40% of the world’s total, official statistics demonstrated.

Throughout the past 10 years, the tobacco industry has provided 7 to 10% of the whole yearly central government profits, official statistics confirmed.

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