China & Smoking: Higher Taxes on the Way?

Smoking is an emormous global issue, not just among expats. As I discussed before, China’s smoking rate is astonishingly high with over 50% of men smoking. The (surprisingly?) excellent national daily newspaper Global Times this week has a good, comprehensive review of the situation, including growing efforts to control smoking by raising cigarette taxes. The major problem with that issue is that the tobacco tax is China’s #1 source of tax revenue; plus, all major tobacco companies are state owned. Here’s a good quote:

An estimated 350 million Chinese smoke and 3 million more take up the habit each year. Twenty-two percent of the world’s population is home to a third of its smokers, grows a third of the world’s tobacco and manufactures a third of its cigarettes.

The tobacco industry is China’s single-biggest taxpayer. The government raised 8.3 percent of its entire financial revenue – 513.1 billion yuan – from tobacco taxes in 2009 according to the State Tobacco Monopoly Administration.

The income does not even come close to the health costs, say the anti-smoking experts. About 1.2 million Chinese die from smoking-related diseases every year.

Lung cancer became the top cancer killer in 2008, according to the Ministry of Health, the number of cases quadrupling over the past 30 years.

Cancer, cardiovascular diseases and respiratory diseases cost the country 223.7 billion yuan annually, according to Li Ling, an economics professor at Peking University.

“Add to that the costs of other diseases and indirect costs such as fire and environmental pollution, the amount goes far beyond the tax revenue generated by the industry,” Li told a conference at Tsinghua University in Beijing.

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