According to the country’s Ministry of Finance, China is set to raise the wholesale tax rate for cigarettes from 5% to 11% in a move to deter smokers in the world’s largest producer and consumer of tobacco. China has accelerated a campaign against smoking over the past year.
In April, the parliament passed legislation banning tobacco ads in the mass media, public places, on public transport, and outdoors. Cigarette wholesalers must also pay an additional RMB0.005 (less than 1 cent) per cigarette sold, a statement said.
According to Bloomberg, the increased tax rate is expected to provide an additional RMB20 billion (US$3.2 billion) worth of taxes compared to last year. China’s cabinet has issued a draft regulation to ban indoor smoking, limit outdoor smoking, and end tobacco ads. Many cities have already banned smoking in public places, but critics say those curbs are enforced unevenly, or not at all.
The World Health Organization praised the tax hike, but added that the additional cost had to be passed to consumers for the measure to be effective.
“Increasing tobacco taxes and prices is the single most effective way of reducing tobacco consumption in the short term,” said Bernhard Schwartländer, the WHO representative in China.
The campaign against smoking has picked up steam over the past several months, but the leadership and anti-smoking campaigners have faced tough opposition from the state-owned tobacco monopoly, which wields great sway because it contributes an estimated 7-10% of government tax revenue.