Chinese Cigarette Sales Drop After Rise in Tobacco Tax

It's a small decrease, but it's a start

Health officials are claiming victory in the battle against tobacco-related deaths after last year’s tobacco tax hike led to a minor decrease in sales.

A report released earlier this week by the World Health Organization (WHO), claims cigarette sales in China have dropped 3 percent between April 2015 and March 2016 compared to the same period the year before. When looking at the cheapest tobacco products, sales decreased 5.5 percent

WHO China representative Bernhard Schwartlander hailed the decrease as “good news”, noting that lower-income families were impacted the hardest by tobacco-related health problems: “Tobacco use - in particular, the cost of tobacco-related illness such as lung cancer - can plunge people and families into poverty, and make it impossible for others to escape it,” said Schwartlander.

Schwartlander warns that China will face dire health and economic consequences in the years ahead unless it introduces stricter anti-smoking policies and higher cigarette taxes. He wrote last December in a China Daily op-ed, “If tobacco use is not significantly reduced, it will aggravate the economic and social impact of an aging population, increasing the odds of a future economic slowdown, which in turn will pose a significant social challenge.”

Last May, China’s Ministry of Finance raised the wholesale tax on cigarette products from 5 to 11 percent. It was the third increase in cigarette taxes since 2009. Taxes now make up 56 percent of the cost of a pack of cigarettes in the country.

Despite the hikes, Chinese cigarettes are among the cheapest in the world.

Although the single-digit decrease in tobacco purchases may seem small, China remains the world’s leading country in cigarette consumption. With over half of all men in China estimated to be smokers, cigarette use is a huge threat to public health. More than 1 million people in China die every year from tobacco-related illnesses.

A recent study has warned a third of all Chinese men under the age of 20 will die prematurely unless they quit smoking.

China is also the world’s leading producer of cigarettes. Chinese tobacco companies have traditionally enjoyed protection from anti-smoking legislation thanks to the state-owned monopolies that control them. As a result, big tobacco in China contributes an estimated 7 percent to 10 percent of government tax revenue. According to the WHO report, last year’s tax increase on cigarettes resulted in an additional 70 billion yuan ($11 billion) in revenue for the central government.

Other studies have suggested that there has been no decrease in the number of smokers in China. Last December, the Chinese Center for Disease Control and Prevention found there were 316 million smokers in China, the same amount as there were in 2010. When accounting for annual population increases, there are actually 15 million more smokers in 2015 than there were five years before.

Charles Liu

The Nanfang's Senior Editor