Tax rise fears prompt tobacco hoarding

Tobacco dealers have begun stocking up on cigarettes in fear of a possible tobacco tax rise that could cause a spike in cigarette prices, the Shandong Business Daily reported Monday.

Hu Xianming, director of the consumption division at the goods and services taxation department of the State Administration of Taxation (SAT), said in December that the government would raise the tobacco tax in 2011 to rein in tobacco consumption, but details of the plan are still under discussion, China National Radio (CNR) reported.

The government raised the tobacco tax in May 2009, when it went up by 56 percent, said the report.

“Wholesale purchases of most cigarettes have soared since September and some of the best-selling brand cigarettes are in short supply,” the owner of a wholesale tobacco store in Kunming, Yunnan Province, who stocked cartons of cigarettes, told the newspaper.

Tax rises for tobacco products are believed by some to be an effective method of tobacco control. However, some experts, as well as smokers, have cast doubts over the effectiveness of such a move.

Shi Jian, a researcher at Taxation Research Institute affiliated with the SAT, said that cigarette prices did not change much when the government raised the tobacco tax last time, as the industry chose to bear the cost of the tax and not pass it on to consumers, the CNR report said.

Yang Rongjin, 29, a Beijing resident who has been a smoker for more than five years, told the Global Times Monday that he would continue to smoke even if cigarette prices go up.

“Smokers often choose cigarettes based on their income, and not all cigarettes will be unaffordable for us,” said Yang, who spends about 100 yuan ($15) per month on his habit.

“Raising prices is never a good way to stop people from smoking. It is better to let smokers realize the importance of health and cut down on their smoking by themselves,” Yang added.

Hu Linlin, a researcher at the China Tobacco Tax Research Group established by Tsinghua University, told the Global Times that the tax rise would still have an impact on tobacco companies, even-tually leading to positive results in tobacco control.

“The government might apply unyielding administrative measures to raise cigarette prices in order to strengthen controls on smoking,” Hu added.

China’s health ministry admitted Monday that it has a long way to go in tobacco control, amid criticism of the country’s failure to honor its commitments to the World Health Organization, the Xinhua News Agency reported.


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