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To raise revenue, China turns to tobacco tax

(Xinhua)
Updated: 2009-06-20 15:23

BEIJING -- China has increased taxes on tobacco products, the government said on Saturday.

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Taxes went up on cigarette cartons costing 70 yuan or more to 56 percent from the previous 45 percent rate, the Ministry of Finance and the State Administration of Taxation (SAT) jointly said. Tax for cigarette cartons costing less than 70 yuan rose from 30 percent to 36 percent.

"The move aims to 'moderately' increase financial revenue, and 'perfect' the taxation mechanism", said the document released on the SAT website.

The tax on cigars rose to 36 percent from 25 percent.

Meanwhile an advalorem tax, based on the real value (less inflation factors) of the product, was introduced on tobacco products for the first time, at 5 percent.

Li Ling, Peking University professor said: "Increasing consumption tax of tobacco can not only help government increase income, but also save millions of lives."

China has the world's largest population of smokers. About 350 million of the country's 1.3 billion citizens are smokers in 2008, and about one million die of tobacco-related diseases each year.