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China hikes cigarette tax in anti-smoking drive

China is set to raise the wholesale tax rate for cigarettes to 11 percent from 5 percent, the
Ministry of Finance said on Friday, in a move to deter smokers in the world's biggest maker
and consumer of tobacco.

China has accelerated a campaign against smoking over the past year, despite persistent
opposition from the tobacco industry. Domestic and foreign anti-smoking activists say
China's cigarette habit has come at a heavy cost to the healthcare system.

The parliament passed legislation last month banning tobacco ads in the mass media,
public places, on public transport and outdoors.

Cigarette wholesalers must also pay an additional 0.005 yuan (less than one cent) per
cigarette sold, a statement said, adding that the increase would come into effect on
Sunday.

Gan Quan, director of the China office for the non-profit International Union Against
Tuberculosis and Lung Disease, told Reuters the development was welcome but didn't go
far enough.

"It's good news because raising the tax will result in higher prices, and that will help keep
young people from smoking," he said. "At the same time, in terms of the extent of the tax
hike, it's still a long way from other countries that have done very well in curbing smoking."

China is home to 300 million smokers and 740 million more who are exposed to second-
hand smoke, state media has reported.

The State Council, China's cabinet, has issued a draft regulation to ban indoor smoking,
limit outdoor smoking and end tobacco ads. Many cities have already banned smoking in
public places, but critics say those curbs are enforced unevenly, or not at all.

The World Health Organization praised the tax hike, but added that the additional cost had
to be passed to consumers for the measure to be effective.
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"Increasing tobacco taxes and prices is the single most effective way of reducing tobacco
consumption in the short term," said Bernhard Schwartländer, the WHO Representative in
China. "The WHO is therefore very pleased to see tobacco taxes increased in China, but it
is crucial that the increase be passed on to retail prices."

The campaign against smoking has picked up steam over the past several months, but the
leadership and anti-smoking campaigners have faced tough opposition from the state-
owned tobacco monopoly, which wields great sway because it contributes an estimated
7-10 percent of government tax revenue.

Read more at Reutershttp://www.reuters.com/article/2015/05/08/us-china-smoking-

idUSKBN0NT0UR20150508#9qtRQCopVbleW20B.99

DATE- MAY 8 2015

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China's cigarette sales fall slightly after tobacco tax - WHO

MAY 10, 2016 / 1:22 PM

BEIJING, May 10 (Reuters) - Cigarette sales in China fell slightly over the past year after a
hike in tobacco taxes, the World Health Organisation said on Tuesday, as the country
works to suppress a habit with major healthcare costs.

The world’s largest producer and consumer of cigarettes has stepped up its battle on
smoking, despite persistent opposition from the tobacco industry.

China has 300 million smokers and 740 million more who are exposed to secondhand
smoke, state media have said.

The number of cigarettes sold in China fell 3.3 percent in the year to March 2016 from the
previous year, the WHO said in a statement.

Sales of the cheapest cigarettes fell 5.5 percent over the period, the WHO added,
signalling that the tax prompted poor smokers, in particular, to cut back on cigarette
purchases.

“This is good news, because it is people in the lowest socio-economic groups in China
who are most profoundly affected by the health and economic burdens caused by
smoking,” said Bernhard Schwartländer, the WHO representative in China.

Last year, China hiked its wholesale tax rate on cigarettes to 11 percent from 5 percent, an
increase the WHO said earned revenue of about 70 billion yuan ($11 billion) for the central
government in 2015.

Retail cigarette prices rose about 10 percent on average, with the cheapest brands
becoming as much as a fifth more costly, a WHO analysis found.

Anti-smoking campaigners in China have faced tough opposition from the state-owned
tobacco monopoly, which wields great sway because it contributes an estimated 7 percent
to 10 percent of government tax revenue.

Two-thirds of young men in China take to smoking, mostly before the age of 20, and
around half of them are eventually killed by the habit unless they quit, a study showed last
year. (Reporting by Megha Rajagopalan; Editing by Clarence Fernandez

https://af.reuters.com/article/commodities07News/idAFL3N1872PY
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Your cigarette now costs 44% more

June 28, 2014

Business Standard

In Mumbai and Delhi, 84-mm sticks of popular brands are available for Rs 12-13

each Health Minister Harsh Vardhan’s recent request to Finance Minister Arun Jaitley -

for an increase in tax on cigarettes from 45 per cent to 60 per cent in the coming

Budget - seems to have had a serious impact on cigarette smokers pockets. A higher

tax rate would fetch the government an additional Rs 3,800 crore of revenue, Vardhan

had said.

Anticipating an imminent increase in duties in the Budget early next month, retailers

in key metro cities like Mumbai and Delhi have already increased cigarette prices by

as much as 44 per cent. Since Thursday, 84-mm cigarette sticks of some of the

popular brands like Classic, Gold Flake and Marlboro are being sold for Rs 12-13

each, compared with Rs 8.50-9 earlier. The smaller cigarettes (of between 69 mm and

74 mm), though, have seen a less steep price increase of Rs 2 a stick.

A pack of 10 king-size cigarettes (84-mm) is available for nothing less than Rs 90-95

at retail shops, compared with Rs 85 earlier.

The sudden steep increase in cigarette prices appears to be a chain reaction. While

selling a cigarette pack with printed maximum retail price (MRP) of Rs 85 for Rs 90-

95, your retailer blames his distributor, who, apparently, supplied the pack for Rs 87-

90, instead of around Rs 80.

When contacted, a spokesperson for ITC, the country;s largest cigarette manufacturer,
said Retailers are prohibited by law from selling products above MRP. If they

overcharge, they are liable to be prosecuted by the authorities. ITC prints the MRP

on its cigarette packets in compliance with the package commodities rules. It sells
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cigarettes to wholesale dealers on a principal-to-principal basis. These wholesale

dealers sell to secondary wholesalers (distributors), who then sell to the retailers.

These retailers are the point of sale for common buyers.

Some retailers say the price of a pack of 10 could hit Rs 100, as there is a shortage in

supplies. A top cigarette company source, however, seems to defend the distributors.

He suggests the retailers are wrongly blaming the distributors for choking supplies, so

that they can sell the cigarette stocks at higher rates.

Though the phenomenon of a rise in cigarette prices ahead of the Budget is not new -

every year, a price increase is seen a fortnight before the Budget - the rise of 44 per

cent this time is much steeper than the usual 15-20 per cent.

Cigarettes, which constitute only 12-13 per cent of India’’s total organised tobacco

consumption, give the government nearly 80 per cent of its tax revenues from tobacco

products. It is estimated that just the excise revenue from cigarettes is Rs 15,000

crore, since this product is taxed at a rate 47 times higher than other tobacco products

like bidis, say industry sources. However, growth of the Rs 30,000-crore cigarette

industry has been almost stagnant for some time.

Health experts, however, welcome the steep increase in cigarette rates. They say this

might bring down consumption of cigarettes. India is home to roughly 10 per cent of

the world’s tobacco smokers - next only to China. India is also the world's third-

largest tobacco leaf producer.

URL: http://www.business-standard.com/budget/article/your-cigarette-now-

costs-44-more-114062800095_1.html
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Indirect taxation leads to Black markets

60% of cigarettes sold in New York are smuggled: report

By Aaron Smith @AaronSmithCNN January 10, 2013: 3:24 PM ET

• http://money.cnn.com/2013/01/10/news/companies/cigarette-tax-new-york/

NEW YORK (CNNMoney)

New York has the highest cigarette tax rate of any state, and nearly
two-thirds of the state's cigarette market is illegal, announced the
think tank Tax Foundation on Thursday.
The Tax Foundation said that 60.9% of cigarettes sold in New York State are smuggled in
from other states.
This makes New York the biggest importer of black market cigarettes, along with the
state's highest tax rate of $4.35 per pack. That's compared to Missouri, the state with the
lowest rate, of 17 cents per pack.
In New York City the tax rate is even higher, adding another $1.50 per pack to the state
rate. It's not uncommon for smokers to pay $12 for a pack.
The report said that tobacco smuggling and the tax rate have risen practically in tandem
since 2006. The New York State tax on cigarettes has risen 190% since that time, as the
rate of smuggling increased 170%.
This bears out a report issued last month by the New York Association of Convenience
Stores, estimating that "chronic cigarette-tax evasion" deprives the state of at least $1.7
billion in tax revenue and 6,700 jobs.
Joe Henchman of the Tax Foundation, who co-authored the report with scholars from the
Michigan-based Mackinac Center for Public Policy, said the smuggling takes place in
various forms. In many cases, the smugglers physically transport the cigarettes into New
York from nearby states with much lower tax rates, such as Virginia, a longtime tobacco
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producer with a rate of 30 cents per pack. The smugglers will often use counterfeit tax
stamps to conceal the illegal nature of their wares.
Henchman said there have also been cases of New Yorkers making their own cigarettes
as "kind of the equivalent of moonshine" and there have also been hijackings of tobacco
trucks. But on a much grander scale, he said the Internet serves a primary role in illegal
cigarette purchases.
Related: Tobacco companies ordered to advertise smoking risk
Also, he said that some Native America reservations sell tax-free cigarettes, and this is
why New York State has a "long-running dispute" with the Oneida Indian Nation.
The Oneida Indian Nation manufactures its own brand of cigarettes called Niagra's. The
Nation says, on its web site, that it used to make the cigarettes in Buffalo, but moved its
Sovereign Tobacco company to Oneida in 2010, "availing itself of a long-settled law that
recognizes the right of Indian tribes to sell products they manufacture on their own
reservations without interference from state laws."
At the time, the tribe said that 15 people were employed in cigarette manufacturing, and
that keeping those jobs on the reservation "will ensure that the loyal customers of the
Nation's enterprises are able to continue buying Nation-manufactured cigarettes at
reasonable prices, free from New York State taxes."
Representatives of the Nation did not immediately answer messages from CNNMoney.
Related: What would a legal marijuana industry look like?
Nationwide, the industry leaders are Reynolds American (RAI), parent of R.J. Reynolds
Tobacco Company, which produces Camel, Pall Mall, Winston and other brands, andAltria
Group's (MO) Phillip Morris, which produces Marlboro, Virginia Slims and Parliament.
"R.J. Reynolds works closely with law enforcement every way we can, however this is a
law enforcement problem," said R.J. Reynolds spokesman Bryan Hatchell, noting that the
black market is a nationwide issue. "Governments are losing billions of dollars. Money
spent on law enforcement will result in an excellent return on investment to the state."
Altria spokesman David Sutton said his company also works with law enforcement to help
officers recognize counterfeit products, and it tries to convince state governments to keep
their tax rates within bounds, to avoid "unintended consequences" like a black market.
Sutton said the "very, very high" tax rate in New York "creates an incentive for criminal
activity to provide product to consumers to avoid paying that high tax."
First Published: January 10, 2013: 1:27 PM ET
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Indirect taxation impacts revenue from Cash crop tobacco

High taxes on cigarettes impact farmer’s income

By ET Bureau | Oct 30, 2015, 03.00 AM IST

NEW DELHI: High taxes on cigarettes may have led to a drop in sale of domestic brands of
cigarettes, but it has impacted farmer's income and also increased smuggling, a
representative of a farmers association said.

"From sale of 104 billion cigarette sticks in 201314 by organised players, it has come down
to 90 billion sticks in 201415. It should be good news but the truth is that majority of
cigarettes are being smuggled from the porous border of Pakistan, Nepal, and Bangladesh
due to the huge price differentiation. This is making an impact on farmer's remuneration,"
said PS Murali Babu, general secretary at the Federation of all India farmer association.
Farmers association said that as per the Ministry of Finance data, custom seizure of
smuggled foreign cigarettes has exploded in the last two years. Seizures in the first four
months of 201516 at 55,890 was double the quantity seized in 201314.

"In Andhra Pradesh farmers in 201415 season got Rs 90 per kg, whereas a year ago it was Rs 115 a
kg. The government instead of providing solutions, have issued orders to tobacco farmers in Andhra
Pradesh to cut tobacco cultivation by 52 million kgs next year(harvesting begins by December). A
sudden call for cutting production is going to be difficult to absorb for farmers already under
debt,"said Gadde Seshagiri Rao, member, Tobacco Board.

Rao said that since 2009 when pictorial warnings were introduced on cigarettes, the illicit cigarette
trade has grown by 31% thereby, reducing the demand for farmers. India is the second largest
exporter of quality tobacco earning.`6,000 crore in foreign exchange every year, said Rao.
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Indian Jugaad to reduce the pain of high taxes on cigarettes

75% of cigarettes sold loose in India, says study

22 Aug, 2015, 06.01PM IST

SHIMLA: Nearly 75 percent of all cigarettes in India are sold as single sticks valued at close to 30
percent of the Rs. 35,000 crore (over $5 billion) Indian market, an international journal says. The
sale of single cigarettes, which is not in the interest of public health, is an important factor for early
experimentation, initiation and persistence of tobacco use, says the study.

"Based on the data collected from 10 jurisdictions, we estimate that nearly 75 percent (59-87
percent) of all cigarettes are sold as single sticks," says the study, published in the Asian Pacific
Journal of Cancer Prevention.

The study was conducted under the International Union Against Tuberculosis and Lung Disease
across 10 cities - Agartala, Baroda, Chennai, Delhi, Goa, Indore, Jaipur, Jorhat, Patna and Shimla. It
recommends that the Indian government ban the sale of single cigarettes and eliminate "kiddy
packs". (The ban does exist but is observed more in breach than in practice.)

"Under the tobacco control legislation in India, each tobacco product has to bear a specified
pictorial health warning. But the single cigarette sales defy the overall purpose," study co-
investigator Ravinder Kumar told IANS.

"The single cigarette sale is a win-win game for the tobacco industry, but not in the interest of
public health," said Kumar, a consultant with the World Health Organization's tuberculosis
programme and based in Shimla.

It says single or loose cigarettes also promote the sale of illicit cigarettes and neutralise the effect of
pack warnings and effective taxation, making tobacco more accessible and affordable to minors.

This is the first study to have estimated the size of the country's single stick market.

The survey was conducted in February 2014 by 10 authors to estimate the sale of cigarettes in packs
and sticks, by brands and price over a full business day.

Smoking of cigarettes, bidis and other smoked forms of tobacco are the single largest cause of
preventable death among adults in India with more than 1.2 million dying annually.

The study says singles are preferred by smokers as it helps to conceal their habit since it is largely
unacceptable publicly in India.

The singles also give vendors a perverse incentive to extract extra margins. For cigarette
companies, singles make it easier to promote new brands and conduct market research on customers
at the point of sale.

Vendor interviews reveal that the high volumes of singles sale in the premium segment is
experimentation of new and existing users, who aspire to become regular smokers of
these cigarettes, which are currently smoked occasionally by them, says the study.

Goa among all jurisdictions has the lowest proportion of single cigarette sales and higher pack
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sales.

It finds that in effect a single cigarette market neutralises four important tobacco control strategies -
protecting minors, pictorial warnings, support quitting and effective taxation.

According to it, students are vulnerable to an early initiation of tobacco use. An easy affordability of
loose cigarettes is an enabling factor for the students and minors.

The study establishes that taxes can be raised from 15 percent to 32 percent (depending upon the
segment) till such time as single stick price and pack price variance is zero or diminished.

http://economictimes.indiatimes.com/magazines/panache/75-of-cigarettes-sold-loose-in-india-says-
study/articleshow/48621036.cms: Read on the 22nd of November.
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Higher rates of taxes needed to dissuade smokers

Double tobacco tax, Council on Smoking and Health urges Hong Kong
government
PUBLISHED : Wednesday, 07 January, 2015, 3:36pm

UPDATED : Thursday, 08 January, 2015, 4:29am

An anti-smoking body is calling on the government to double tobacco tax in a bid to get
more Hongkongers to kick the habit.

The current tax rate on a pack of cigarettes is 69 per cent. Doubling that would see the
price rise from HK$55 to HK$93.

The Council on Smoking and Health (COSH) believes the increase would cut the smoking
rate from 10.7 per cent of over 15-year-olds - about 650,000 people - to between 9.5 and
9.9 per cent in one to two years. "At least now we have a preliminary goal and hope the
smoking rate will drop further in the future," said the council's chairman, Antonio Kwong
Cho-shing.

The proposal follows a survey by COSH and the University of Hong Kong from May to
September last year. Some 2,419 people were questioned: 800 smokers, 800 former
smokers and 819 people who had never smoked. More than 65 per cent believed the 11.8
per cent increase in tobacco tax last year was not effective in getting smokers to quit, and
72.9 per cent supported an annual increase in tobacco tax.

On average, respondents believed a price tag of HK$106 on a pack of cigarettes would

serve to discourage smoking. But, for the smokers, that price rose to HK$171. For those
who had never smoked, it fell to HK$98.

COSH executive director Vienna Lai Wai-yin, said that increasing tobacco tax was an
effective way to encourage smokers to quit. "This has a big influence on youngsters and
the elderly, who are more price responsive," she said.

She added that the World Health Organisation described tobacco tax as an "effective and
important means" to reduce tobacco consumption.

Tobacco tax in the city was raised by 300 per cent in 1983, which led to a 4.6 per cent fall
in the number of smokers over two years, to 18.7 per cent. However, the tax has gone
unchanged in 12 budgets since 1999, with only two significant increases - 50 per cent in
2009 and 41.5 per cent in 2011.

According to government surveys, the smoking prevalence of people aged 15 or above

dropped from 11.8 per cent in 2008 to 10.7 per cent in 2012. Among secondary school
pupils, the figure fell from 6.9 per cent to 3 per cent.
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"If the tax was increased by 300 per cent, we would totally support it. It is indeed more
effective than television advertisements," said Professor Lam Tai-hing from the HKU
School of Public Health.

Helen Chan Ching-han, supervisor of the Tung Wah Group of Hospitals' Integrated Centre
on Smoking Cessation, said raising tobacco tax was particularly significant in encouraging
low-income smokers to quit. "Whenever there is a rise in tobacco tax, the number of calls
to our hotline doubles," she said.

The Coalition on Tobacco Affairs called the proposal "irresponsible", warning higher prices
would increase tobacco smuggling. It called for a further freeze on tobacco tax.