China To Hike Cigarette Taxes

December 12, 2014 Taxation in China

Smoking in ChinaBEIJING – China’s 300 million smokers will soon be paying more to keep up the habit, as the government looks at raising taxes on tobacco products.

The government of China may soon increase the taxes on the sale of cigarettes and tobacco products, according to a statement made on December 10th by a spokesperson for the National Health and Family Planning Commission (NHFPC) Yao Hongwen.

The NHFPC will now initiate work with other government agencies and departments to formulate a new tax on the sale of cigarettes, with the ultimate aim of encouraging smokers to quit the habit.

Yao Hongwen did not provide any indication on the rate of the tax that may be applied, but stressed that China’s current ongoing reforms to the national taxation and fiscal system presents a perfect opportunity to overhaul and improve the methods of taxation of tobacco.

Currently it is estimated that more than 300 million people in China are active smokers, with another 740 million suffering from the effects of secondhand smoke on a regular basis, while one third of all lung cancer death now occur in China.

This is not the first time in recent history that China has mulled the implementation of tax hikes to tobacco products, with an increase to the tax rate being implemented in 2009, although the extra costs were absorbed by tobacco companies and not passed to consumers.

Photo By: Matt Ming