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China Mulls Cigarette Tax Hike

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

12 December 2014


A spokesman for the China's National Health and Family Planning Commission has disclosed that it will work with other government agencies to push for an increase in tobacco and cigarette excise taxes in the country.

While there was no indication of the level of rate increase that is contemplated, Yao added that the rate hike would be useful on public health grounds if it reduced the very high number of smokers in China. As the world's largest tobacco manufacturer and consumer, the country is reported now to have more than 300m smokers.

Tobacco and cigarettes are looked on as being comparatively cheap, after China's rapid economic and disposable income growth since the last tobacco tax rise in 2009, which did not even cause a rise in cigarette prices.

The movement towards a higher tobacco tax in China follows the recent budget agreement in South Korea, which has imposed an excise tax rate hike such that the average price of a packet of cigarettes will increase by 80 percent. While providing significant additional revenue for the Government's welfare reforms, it is also expected the price rise will cut the high South Korean smoking rate.

TAGS: tax | business | public health | China | excise duty | manufacturing

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