Clear The Air News Tobacco Blog Rotating Header Image

May 9th, 2015:

China Just Raised Tobacco Taxes. Smokers Might Not Notice

China’s 300 million smokers just learned that, as of Sunday, their government will more than double the consumption tax on cigarettes to 11 percent—a move that ordinarily would draw unqualified support from the World Health Organization.

China loses 1 million people each year to smoking-related diseases, and raising the nation’s current 5 percent tax rate is seen by health advocates as one of the most effective ways to reduce that grim toll. Last year WHO even adopted the theme “Raise Taxes on Tobacco” at its May 31 World No-Tobacco Day.

Still, in China, where the state serves as both the tobacco regulator and the cigarette manufacturer, a tobacco-tax increase isn’t always what it appears to be. The 5 percent consumption tax was introduced in 2009, along with higher taxes on manufacturing cigarettes. But smokers were largely shielded from the impact. “The day after the announcement, the tobacco regulator said it would swallow the additional cost and kept the retail price unchanged,” Jiang Yuan, a director of the National Tobacco Control Office, told Caixin Media last year. She was referring to the State Monopoly of Tobacco Administration, which runs China National Tobacco Corp., the world’s biggest cigarette maker. The People’s Daily called the 2009 tax increase “a dumpling with no fillings.”

Given that history, WHO’s China representative was cautious today in praising the latest tax increase, which is reportedly forecast to raise 20 billion yuan ($3.2 billion) in taxes this year. The health organization declared itself pleased to see the increase, which also includes a 0.005 yuan tax on every cigarette sold. “But it is crucial that the increase be passed on to retail prices,” WHO’s Bernhard Schwartländer said in an e-mail to Bloomberg.

If the tax isn’t passed to consumers, it would come directly from China National Tobacco’s earnings. As a rule, the state-owned enterprise sends the government 20 percent of its net profit as a dividend each year. The State Monopoly of Tobacco Administration couldn’t be reached for comment. While the tobacco company’s recent financial results haven’t been made public, China National Tobacco’s net profit in 2012 was 165 billion yuan ($26.6 billion).

The new announced tax increase comes just a few months after Li Keming, the brother of Chinese Premier Li Keqiang, stepped down as the tobacco regulatory agency’s deputy director after 30 years with STMA. His departure for another job was viewed by some observers as a signal that China may take new action to reduce smoking.

Health experts in China are optimistic that retail prices will be increasing this time. “I’m happy for those pressured by a price hike for cigarettes. I wish more people could not afford to buy,” Xu Guihua, deputy director of the Chinese Association on Tobacco Control, a nongovernmental organization, wrote on her microblog. She punctuated her post with a smiling emoji.

Malaysia to ban smoking at parks, eateries

KUALA LUMPUR — Smokers will soon no longer be allowed to light up at all eateries across Malaysia, even in open air premises, the Health Ministry said.

According to The Star today (May 9), the ministry said the ban will include even mamak stalls and food courts, apart from air-conditioned restaurants.

Other areas to be gazetted as no smoking zones are all public and national parks, and even theme parks, the daily wrote.

Citing a post on the ministry’s website, The Star report said the ban is in line with guidelines in the World Health Organisation’s Framework Convention for Tobacco Control, of which Malaysia is a signatory.

The daily also cited estimates from the ministry claiming that 100,000 Malaysians die every year from smoke-related illnesses.

Findings in 2011 by the Global Adult Tobacco Survey carried out in Malaysia showed that 83.5 per cent of respondents want all public places to be 100 per cent smoke free, The Star cited the ministry as saying.

Despite the findings, however, the public are encouraged to offer its feedback on whether smokers should be allowed smoke in special designated areas in eateries or be banned completely from lighting up.

Feedback on whether there should be designated smoking areas at public parks, and on who should be held responsible for any flouting of the ban ― restaurant operators or smokers — is also encouraged.

The public can give their views to the ministry’s website until May 18.

According to the daily, a number of coffee shop associations and restaurant owners are also protesting the ban, with some calling for it to be implemented gradually.

Last year, the ministry gazetted the ban on smoking at all rest areas and recreational spots along highways, as well as sheltered walkways in the city centre.

The first comprehensive assessment of the costs of tobacco in Asia

Download (PDF, 915KB)

Securing a healthier future for the National Health Service

Download (PDF, 133KB)