WHO Urges China To Raise Taxes On Tobacco

The World Health Organisation (WHO) has advised the Chinese government to increase its present taxes on tobacco, reported the China Daily on Friday, with nearly 1.2 million Chinese dying annually of smoking-related diseases.

The World Health Organisation (WHO) has advised the Chinese government to increase its present taxes on tobacco, reported the China Daily on Friday, with nearly 1.2 million Chinese dying annually of smoking-related diseases.

According to Angela Pratt, technical officer of the Tobacco Free Initiative in the WHO office in China, China’s tobacco tax rate is among the lowest in the world, meaning that the nation’s 350 million smokers can have access to cigarettes costing less than smokers 5 yuan ($0.80) a pack (of 20 cigarettes).

This is “much, much lower than the average cost in developed countries,” said Pratt, during a media briefing for the launch of the Chinese-language translation of the WHO Technical Manual on Tobacco Tax Administration, adding that the tobacco tax should increase relative to China’s current economic status.

[quote]”As China’s economy has been growing rapidly over the past two decades, the price of cigarettes has not grown at a commensurate rate, which means cigarettes, already cheap, have become more affordable over time,” she said, citing data showing that the average annual per capita income required to buy 100 packets of the cheapest cigarettes in China has dropped from 14 percent in 2000 to 3 percent in 2010.[/quote]

Today, China is the world’s largest consumer and producer of cigarettes, accounting for 42 percent of the world’s total. Government data shows that more than 60 percent of all males above the age of 15 smoke, while the WHO has predicted that 100 million young men in China will die prematurely as a result of smoking-related causes.

According to a 2006 article by the China Daily, the number of Chinese smokers is also growing by three million people a year. Since the 1980s, the government has set up a state monopoly of the tobacco industry, which has contributed between 7 and 10 percent of the total annual central government revenue of the last decade.

The WHO has recommended that at least 70 percent of the retail price of cigarettes should come from excise taxes to effectively reduce tobacco consumption. Presently the excise tax rate in China is about 25 percent, while the global average is around 50 percent.

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Liang Ji, an associate professor of the Research Institute for Fiscal Science under the Ministry of Finance, told the China Daily that there was still plenty of room for further tax hikes in China’s tobacco industry.

Liang suggested that the taxation authority kept raising the tax on tobacco producers ntil they were forced to increase retail prices.