Chinese Government Backtracks On Smoking Tax Order

by Mary Swire, Tax-News.com, Hong Kong

08 May 2009

Local government officials in one Chinese county will no longer be forced to smoke around a 250 thousand packets of cigarettes a year to boost tax revenues after the proposal was rescinded.

The order - which was issued by officials in Gongan County - would have forced local authority leaders (civil servants and teachers, for example) to smoke their way through 250,000 packets of local-brand cigarettes every year in an attempt to increase government revenues through cigarette taxes.

Those who failed to meet their cigarette quota or who were caught smoking rival brands were to be fined, and even possibly fired.

There are over 350 million smokers in China. The move would have increased annual sales of cigarettes by up to CNY4.1m (GBP400,000) in the region.

Explaining the logic behind the measure, Chen Nianzu, a member of the Gongan cigarette market supervision team, stated:

"We are guiding people to help contribute to the local economy. The regulation will boost the local economy via the cigarette tax."

However, the plan has since been abandoned after speculation arose that the government was ignoring the health implications of the regime simply to secure sales of the Hubei-brand cigarettes against their competitors.

The measure also contradicted several recent campaigns by the government to help encourage individuals to kick their smoking habits after figures revealed that around one million Chinese people die every year of smoking-related diseases.

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