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China Tax Call To Cut Smoking Toll

Andrew Jack in London – Financial Times – December 15 2008

Doubling taxes on cigarettes would help sharply cut China’s rising annual toll of more than 1m deaths from smoking while boosting government revenues, according to a study to be presented in Beijing today.

Increasing tobacco taxes from as little as 32 per cent currently towards the international average of 70 per cent would save significant medical costs while having a minimal impact on employment, it concludes.

The work will be launched at a conference attended by senior Chinese finance and public health officials, as internal and international pressure grows for the country to follow others in taking more aggressive measures to tackle smoking, the leading cause of death in China.

It comes at a time of continuing rapid growth in smoking in China, where 300m smokers now consume an estimated two trillion cigarettes a year, or a third of the global total, creating long-term health problems for themselves and passive inhalers.

The analysis argues that cigarettes further impoverish China’s rural poor, absorbing 10 per cent of total smoking households’ annual expenditure as well as imposing heavy medical burdens. A sharp drop in the real price of cigarettes over the past decade has turned many more Chinese into regular smokers.

The research was commissioned with funding from the $500m pledged last summer from the philanthropic activities of Michael Bloomberg, the mayor of New York, and Bill Gates, the joint founder of Microsoft, who joined forces in redoubled efforts to help low and middle income countries tackle disease by strengthening tobacco control.

It calls for China to increase cigarette taxes to 65 per cent – from current rates of 32-45 per cent – which it estimates would generate $15bn a year in revenues and help limit tobacco-related health costs which it forecasts will otherwise reach 10 per cent of healthcare costs within a few years.

Mr Bloomberg, founder of the financial news agency, launched the Bloomberg Initiative to Reduce Tobacco Use in 2005, which has supported work including efforts to assess countries’ compliance with the World Health Organisation’s recommended policies to tackle smoking, including higher taxes, a ban on advertising and health warnings.

The Bill & Melinda Gates Foundation has until now focused its health activities on fighting infectious diseases, but this year unveiled a $125m, five-year anti-smoking programme, including an initial $24m two-year grant to the Bloomberg Initiative, in recognition of other important health problems in the developing world.

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