Tobacco taxation can save lives
BEIJING, 14 November 2012 - "Increasing the retail price of tobacco using taxation is one of the most effective instruments for reducing tobacco use and saving lives."
Dr Michael O'Leary, WHO Representative in China, spoke recently at the launch of Chinese version of the World Health Organization's Technical Manual on Tobacco Tax Administration in Beijing.
Tobacco use is one of China’s biggest killers: more than 1 million Chinese people die from a tobacco-related illness every year. With more than 300 million smokers in the country, the annual death toll from tobacco will increase to 3 million by 2050 if smoking rates are not reduced.
Data compiled by Professor Rong Zheng from the University of International Business and Economics (UIBE) in Beijing and Professor Teh-Wei Hu from the University of California in Berkeley shows that a modest tobacco tax increase, if passed onto the retail price of cigarettes, could save hundreds of thousands of lives, at the same time raising billions in additional revenue for the Chinese government.
A 1 RMB ($US0.16) increase in the price of each pack of cigarettes could:
- decrease cigarette consumption in China by 3.0 billion packs of cigarettes annually
- reduce the number of smokers in China by 3.42 million, in doing so eventually stopping more than 1 million premature deaths from tobacco, and
- increase annual revenue to the Chinese government by between 97.5 billion and 129 billion RMB (between $15.5 billion and $US20.5 billion).
Cigarettes are much more affordable in China than in many other countries. As a result of China's unprecedented economic growth in the last two decades, cigarettes have become even more affordable, as incomes have increased much faster than the price of cigarettes.
The WHO's Framework Convention on Tobacco Control (FCTC), to which China is a Party, recommends that countries increase tobacco taxes taking into account their national health objectives concerning tobacco control. Additionally, WHO recommends as a best practice that countries set excise taxes so that they represent at least 70 per cent of the retail price of cigarettes.
The effective rate of taxation as a proportion of the retail price of tobacco in China is significantly lower than this – between 30 per cent and 40 per cent according to most estimates.
"This makes action to encourage Chinese people to quit smoking through making cigarettes less affordable more urgent than ever before," said Dr O'Leary.
"A tobacco tax increase passed onto the retail price of cigarettes will not hurt the economy. On the contrary, in reducing the number of smokers in China, a tobacco tax increase will avert billions in medical costs and lost productivity, due to the number of lives saved and tobacco-related illness avoided. A tobacco tax raise passed onto retail prices is 'win-win' for China," Dr O'Leary stressed.
For more information please contact:
Communications Officer, WHO China
Office Tel: 65327191