Tax hike has little effect on smokers

By Lan Tian (China Daily)
Updated: 2009-07-28 07:41

The government should raise both taxes and the retail price of cigarettes as a tobacco control measure, experts said after a survey found 80.5 percent of Chinese smokers support raising tobacco taxes.

The survey, conducted by Tsinghua University, Harvard University and the research institute for fiscal science under the Ministry of Finance, polled 3,000 families in 18 cities about their opinions on cigarettes taxes.

About 85 percent of respondents supported the government increasing tobacco taxes, and 80.5 percent of smokers were also in favor.

The survey was conducted in April ahead of the May 1 increase in production and consumption taxes on cigarettes.

Under the hike, a five percent consumption tax was imposed on cigarette wholesalers. It meant taxes on cartons of cigarettes costing 70 yuan ($10) or more increased from 45 percent to 56 percent. Taxes on cartons costing less than 70 yuan increased from 30 percent to 36 percent.

Experts predicted the higher tax rate would lead to higher cigarettes prices, but that hasn't happened.

"The wholesale and retail prices of cigarettes have not changed in the past two months," said Liu Kehong, a cigarette shop runner in Beijing's Chaoyang district.

For example, the retail price for a carton of Zhonghua cigarettes has remained about 400 yuan for several months, he said.

"Even if the tax increases the price, it won't change my smoking habit," said Li Yun, a 27-year-old smoker who smokes one pack every day.

In Hangzhou, Zhejiang province, cigarette retail prices in supermarkets and shops remain unchanged, Hangzhou Daily reported.

In Nanchang, Jiangxi province, the wholesale and retail prices did not change because cigarette manufacturers and the tobacco monopoly bureau shouldered the increased taxes, Xinhua quoted an anonymous tobacco monopoly bureau official saying.

Hu Angang, the survey's initiator and director of the center for China study of Tsinghua University, said the price remained unchanged because cigarette prices in China are controlled by the government instead of the market.

"To effectively control tobacco through tax policy, the government should raise tax rates as well as tobacco prices at the same time," China News Agency quoted him as saying yesterday.