The National Health and Family Planning Commission of China publicized in the last week of 2014 its plan to push for an increase in the cigarette tax as well as the retail price of cigarettes because it believes that a further tax hike will serve to avert the public health threat that smoking poses. As the most populous country in the world, China is naturally also the world’s largest tobacco producer and consumer, with more than 300 million smokers, of whom more than 1 million die every year from smoking-related diseases according to the Chinese authorities.
Although some are skeptical about whether an increase in taxes on cigarettes will mean a sharp increase in the illicit trafficking of tobacco products as well, a general consensus seems to be building in favour of a tax hike, especially since China already lags far behind the WHO standard for the retail tax on cigarettes. The World Health Organization that the cigarette retail tax be at least 70 percent of the retail price to reduce tobacco use, while the current total cigarette tax in China is about 40 percent only.
However, it should be noted that this not the first time that authorities will try to employ this method in order to curb smoking. The previous time the cigarette tax was raised in China was in 2009, but this had no effect on the sales of cigarettes because cigarette companies decided not to raise their prices, preferring instead to absorb the additional cost in order to maintain their customers.
Inspired by the example of South Africa, where consumption fell by 30 percent after the government raised the tobacco tax from 32 to 52 percent, the Chinese authorities aspire to implement a tax increase that would result in squeezing the industry’s profit to such a level that companies will be forced to raise their retail prices, because they will have no other choice. Moreover, they point out that this will not only curb smoking but will also increase the government’s income from the tax. According to official data, in 2013 the tobacco industry had contributed more than 960 billion yuan ($155 billion) in taxes, accounting for 8.6 percent of the nation’s total.
Therefore, we can quite safely assume that Chinese smokers will soon be called to pay more for their cigarettes.
In South Korea, the New Year has started with bad news for the country’s smokers, since the prices of cigarettes more than doubled on 1st January 2015, following the approval by the country’s parliament last year of an 80% increase in the price of cigarettes, from 2,500 won ($2.25; £1.47) per packet to 4,500 won, in an effort to curb smoking.
Industry sources claim that already tobacco sales fell by nearly half on New Year’s Day compared to the previous year, although some point out that this immediate and sharp drop could also be attributed to the fact that smokers had tried to accumulate big cigarette quantities prior to the price rise.
The government on the other hand is hoping that the decrease is indeed a longer-term trend, and it is also forecasting that cigarette sales will fall by 34% in 2015. To the dismay of South Korean smokers the country’s smoking ban has also been expanded since 1st January 2015 and it now includes, not only large establishments, but also restaurants, bars and cafes of all sizes.
The sharp price increase has meant that cigarettes have began to be sold individually again and not in packs after many years, while the country’s Smokers’ Association, infuriated by the implementation of the new policies has already warned that “If the government keeps pushing out smokers, they will not only find alternate places to smoke but also become more and more defiant against the policy.”
It remains to be seen in the days to come, who will prevail in this battle between authorities and smokers and whether indeed the consumption of cigarettes will be affected as much.