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Study: Raising tobacco tax will save lives

By Wang Zhuoqiong (China Daily)
Updated: 2008-12-17 07:56

Raising the tax on cigarettes by 1 yuan per pack could help save thousands of lives and generate almost 65 billion yuan ($9.5 billion) in revenue for the government, a study released on Monday in Beijing said.

Hu Teh-wei, a professor at the University of California, Berkeley in the United States who led the research team, said: "The low cost of tobacco products in China contributes to very high levels of cigarette smoking, especially among males.

"The most effective way to reduce tobacco use is to raise retail prices through tax increases."

The study, released by the Chinese Association on Tobacco Control (CATC), said that after taking into account inflation and buying power, cigarettes are now twice as affordable as they were in 1990.

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It is much cheaper to smoke in China than it is in regional neighbor countries such as Thailand, Malaysia and Singapore, it said.

At present, taxes on cigarettes in China account for about 40 percent of the total retail price, far below the global average of 65 to 70 percent.

The report proposed an initial increase in the excise tax of 1 yuan per pack, with a gradual increase to 4 yuan per pack.

Over time, taxes on cigarettes should rise to more than 60 percent of the total retail price, it said.

Also, a single tax should be introduced to replace the current two-tier system, which would stop manufacturers lowering retail prices to offset the tax burden, it said. Smoking is a major contributor to early deaths, high healthcare costs and lost productivity, it said.

One million Chinese die each year from tobacco-related diseases, with the figure forecast to rise to 2 million a year by 2020, it said.

Smoking also costs China 186 billion yuan a year, almost 2 percent of GDP, with direct medical costs accounting for 14 billion yuan, or about 3 percent of the country's total healthcare spending, the CATC said.

Mao Zhengzhong, a professor at Sichuan University's school of public health, said buying cigarettes also has an impoverishing effect.

"Families with smokers spend less on food, education, clothing and housing than those that have no smokers," he said.