Early assessment of China's 2015 tobacco tax increase

In 2015, the Chinese government raised tobacco excise tax for the first time since 2009. Changing from previous practice, the State Tobacco Monopoly Administration raised its cigarette prices at the same time. We assessed the early impact of the 2015 tax increase on cigarette prices, sales volumes, tax revenue generation and the potential effect on prevalence of smoking in China. Between 2014 and 2016, the retail price of cigarettes increased on average by 11%, with the cheapest category of cigarette brands increasing by 20%. The average proportion of tax in the price of cigarettes rose from 51.7% to 55.7%. Annual cigarette sales decreased by 7.8%, from 127 to 117 billion packs. The increase in cigarette prices could be associated with a 0.2% to 0.6% decrease in the proportion of adults smoking, representing between 2.2 and 6.5 million fewer smokers. Tax revenues from cigarettes increased by 14%, from 740 to 842 billion Chinese yuan between 2014 and 2016, reflecting an extra 101 billion Chinese yuan in tax revenues for the government. The 2015 tax increase shows that tobacco taxation can provide measurable benefits to both public health and finance in China. The experience also highlights the potential for tobacco taxation to contribute to China's broader development targets, including the sustainable development goals and Healthy China 2030. Looking forward, this link to development can be facilitated through multisectoral research and dialogue to develop consistent cross-sectoral objectives for tobacco tax policy design and implementation.