Abstract
In 2015, the Chinese government raised tobacco excise tax for the first time since 2009. Changing from previous practice, the State Tobacco Monopoly Administration raised its cigarette prices at the same time. We assessed the early impact of the 2015 tax increase on cigarette prices, sales volumes, tax revenue generation and the potential effect on prevalence of smoking in China. Between 2014 and 2016, the retail price of cigarettes increased on average by 11%, with the cheapest category of cigarette brands increasing by 20%. The average proportion of tax in the price of cigarettes rose from 51.7% to 55.7%. Annual cigarette sales decreased by 7.8%, from 127 to 117 billion packs. The increase in cigarette prices could be associated with a 0.2% to 0.6% decrease in the proportion of adults smoking, representing between 2.2 and 6.5 million fewer smokers. Tax revenues from cigarettes increased by 14%, from 740 to 842 billion Chinese yuan between 2014 and 2016, reflecting an extra 101 billion Chinese yuan in tax revenues for the government. The 2015 tax increase shows that tobacco taxation can provide measurable benefits to both public health and finance in China. The experience also highlights the potential for tobacco taxation to contribute to China’s broader development targets, including the sustainable development goals and Healthy China 2030. Looking forward, this link to development can be facilitated through multisectoral research and dialogue to develop consistent cross-sectoral objectives for tobacco tax policy design and implementation.
Highlights
In China, tobacco use is contributing to the increase in noncommunicable diseases.[1]
The Declaration from this meeting notes the “increased burden that noncommunicable diseases impose through impoverishment from long-term treatment costs, and from productivity losses that threaten household incomes and the economies of Member States.”[4] diseases caused by smoking account for around 3% of health expenditures in China, while out-of-pocket medical expenditures, due to smoking, impoverish more than 10 million Chinese households each year.[5,6]
Sustainable development goal (SDG) 3, that is, “ensure healthy lives and promoting well-being for all ages”, includes target 3.4 to reduce by one third premature mortality from noncommunicable diseases by 2030.7
Summary
In China, tobacco use is contributing to the increase in noncommunicable diseases.[1] More than 1 million Chinese adults die annually from tobacco use and this number is estimated to increase in coming years.[2,3] In 2012, the United Nations (UN) addressed heightened concerns about the impact of noncommunicable diseases in a High-Level Meeting of the UN General Assembly. SDG 3 includes target 3.a to strengthen country implementation of the World Health Organization (WHO) Framework Convention on Tobacco Control (FCTC).[7,8] China was an early adopter of the FCTC having ratified the Treaty in 2005. Tobacco taxation is a cornerstone of global tobacco control efforts, with Article 6 of the FCTC recognizing tax as an important and effective means of reducing the demand for tobacco.
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