CRI听力:China to Raise Cigarette Consumption Tax

Besides an increase of the wholesale tax rate, cigarette retailers will also have to pay an additional 0.005 yuan for each cigarette they sell.

This is estimated to make retail price of cigarettes in 2015 increase by over 10 percent from that of last year.

According to the World Health Organization, if tobacco prices go up by 10 percent, about 3.7% of adult smokers would quit smoking.

But that figure could be as high as 9.3% for a teenage smoker.

Deputy director of the Research Institute for Economics, State Tobacco Monopoly Administration Li Baojiang hails the move.

"The raise in the wholesale tax will be felt by consumers as it will be passed on to retail prices. So the number of cigarettes consumed by smokers will be reduced. And the number of smokers will be reduced. Therefore, it'll exert a positive impact by curbing smoking."

Zheng Rong, a professor at China's University of International Business and Economics, agrees.

She also points out that it is a common practice for other countries to curb smoking by raising taxes on cigarettes.

"Studies are indicating that many countries are frequently levying taxes on cigarettes, thus increasing the retail prices. For example, the retail price in Thailand has been frequently raised on an average of six months in the past five to six years. So it has a good and effective record of curbing smoking."

The professor adds that the move can also help to increase government revenues, which can in turns be used to increase health services.

"China is carrying out universal health care coverage and the expenditure in health care is increasing. The government needs to take measures to curb cigarette consumption and reduce the losses caused by it. So it is necessary to curb smoking by raising taxes in terms of government income and expenditure."

Data from WHO shows that if a country increases its tax on each pack of cigarettes by some 50-percent, government revenues will increase by some 100 billion US dollars.

This is the fourth adjustment in China's cigarette wholesale tax since it was set in 1994.

With the raise taking effect on Sunday, taxes will make up around 56-percent of cigarette retail prices, still lower than a world average of 65 to-75 percent.

Experts suggest this means that there is still room to further increase cigarette prices and taxes.

For CRI, I'm Sophie Williams.