IDEAS home Printed from https://ideas.repec.org/p/cdl/ctcres/qt5x2015sv.html
   My bibliography  Save this paper

ECONOMIC ANALYSIS OF TOBACCO AND OPTIONS FOR TOBACCO CONTROL: China Case Study

Author

Listed:
  • Hu, Teh-Wei
  • Mao, Zhengzhong

Abstract

More than 320 million people in China smoke, which accounts for nearly one-third of all the smokers in the world. Almost two-thirds of adult Chinese men are smokers. On the other hand, tobacco production is a state-run enterprise that provides substantial earnings and tax revenue for the government. This paper addresses this policy dilemma by analyzing the impact of an additional cigarette tax on the entire economy. Economic analyses have shown that price elasticities of the demand for cigarettes range from –0.40 to –0.70. At a price elasticity of –0.54, for instance, a 40 cent increase in tax from 1.60 yuan per pack to 2.00 yuan tax per pack (raising the retail price from 4.00 yuan to 4.40 yuan) would reduce consumption by 4.57 billion packs, generate additional central government revenues of 24.74 billion Yuan and save 1.44 to 2.16 million lives. The increase in central government tax revenue would be twice as large as the total losses in industry revenue, tobacco farmers’ incomes and local tax revenue (12.27 billion Yuan). Therefore, considering both the health and economic benefits, additional taxation on cigarettes in China would be a desirable public policy for the Chinese government to consider.

Suggested Citation

  • Hu, Teh-Wei & Mao, Zhengzhong, 2002. "ECONOMIC ANALYSIS OF TOBACCO AND OPTIONS FOR TOBACCO CONTROL: China Case Study," University of California at San Francisco, Center for Tobacco Control Research and Education qt5x2015sv, Center for Tobacco Control Research and Education, UC San Francisco.
    • Handle: RePEc:cdl:ctcres:qt5x2015sv
    as

    Download full text from publisher

    File URL: https://www.escholarship.org/uc/item/5x2015sv.pdf;origin=repeccitec
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hu, T.-W. & Tsai, Y.-W., 2000. "Cigarette consumption in rural China: Survey results from 3 provinces," American Journal of Public Health, American Public Health Association, vol. 90(11), pages 1785-1787.
    2. Frank J. Chaloupka & Adit Laixuthai, 1996. "U.S. Trade Policy and Cigarette Smoking in Asia," NBER Working Papers 5543, National Bureau of Economic Research, Inc.
    3. Chee‐Ruey Hsieh & Teh‐Wei Hu & Chien‐Fu Jeff Lin, 1999. "The Demand For Cigarettes In Taiwan: Domestic Versus Imported Cigarettes," Contemporary Economic Policy, Western Economic Association International, vol. 17(2), pages 223-234, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hang Fu & Da Feng & Shangfeng Tang & Zhifei He & Yuanxi Xiang & Tailai Wu & Ruoxi Wang & Tian Shao & Chunyan Liu & Piaopiao Shao & Zhanchun Feng, 2017. "Prevalence of Tobacco Smoking and Determinants of Success in Quitting Smoking among Patients with Chronic Diseases: A Cross-Sectional Study in Rural Western China," IJERPH, MDPI, vol. 14(2), pages 1-10, February.
    2. Wang, Hong & Sindelar, Jody L. & Busch, Susan H., 2006. "The impact of tobacco expenditure on household consumption patterns in rural China," Social Science & Medicine, Elsevier, vol. 62(6), pages 1414-1426, March.
    3. World Bank, 2011. "Philippine Health Sector Review," World Bank Publications - Reports 27397, The World Bank Group.
    4. Liu, Yuanli & Rao, Keqin & Hu, Teh-wei & Sun, Qi & Mao, Zhenzhong, 2006. "Cigarette smoking and poverty in China," Social Science & Medicine, Elsevier, vol. 63(11), pages 2784-2790, December.
    5. Anne Maryse Pierre-Louis & Katherina Ferl & Christina Dinh Wadhwani & Neesha Harnam & Montserrat Meiro-Lorenzo, 2014. "Setting the Stage to Address the Dual Challenge of MDGs and NCDs," Health, Nutrition and Population (HNP) Discussion Paper Series 100278, The World Bank.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Galinato, Gregmar I. & Olanie, Aaron Z. & Yoder, Jonathan K., 2017. "The Trade and Health Effects of Tobacco Regulations," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 42(3), September.
    2. Joy de Beyer & Linda Waverley Brigden, 2003. "Tobacco Control Policy Control Policy : Strategies Successes and Setbacks," World Bank Publications - Books, The World Bank Group, number 15166, December.
    3. Lin, Tsui-Fang, 2008. "Modifiable health risk factors and medical expenditures - The case of Taiwan," Social Science & Medicine, Elsevier, vol. 67(11), pages 1727-1736, December.
    4. Maryam Mirza, 2019. "Advertising Restrictions and Market Concentration in the Cigarette Industry: A Cross-Country Analysis," IJERPH, MDPI, vol. 16(18), pages 1-17, September.
    5. Nomsa Y. Nkomo & Beatrice D. Simo-Kengne & Mduduzi Biyase, 2021. "The impact of mental health behaviour on tobacco consumption in South Africa," Economic Development and Well-being Research Group Working Paper Series edwrg-02-2021, University of Johannesburg, College of Business and Economics, revised 2021.
    6. Bird Chonviharnpan & Phil Lewis, 2018. "The Effects Of Tax Changes On Tobacco Consumption In Thailand," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 63(03), pages 629-646, June.
    7. Hsu, Chih Cheng & Levy, David Theodore & Wen, Chi Pang & Cheng, Ting Yuan & Tsai, Shan Pou & Chen, Ted & Eriksen, Michael P. & Shu, Chen Chun, 2005. "The effect of the market opening on trends in smoking rates in Taiwan," Health Policy, Elsevier, vol. 74(1), pages 69-76, September.
    8. Hidayat, Budi & Thabrany, Hasbullah, 2010. "Cigarette smoking in Indonesia: examination of a myopic model of addictive behaviour," MPRA Paper 30194, University Library of Munich, Germany, revised 17 May 2010.
    9. Chee‐Ruey Hsieh & Teh‐Wei Hu & Chien‐Fu Jeff Lin, 1999. "The Demand For Cigarettes In Taiwan: Domestic Versus Imported Cigarettes," Contemporary Economic Policy, Western Economic Association International, vol. 17(2), pages 223-234, April.
    10. Tingum, Ernest Ngeh & Parrott, Steve, 2018. "Estimating the Demand for Domestic and Imported Cigarettes in Rwanda," MPRA Paper 88131, University Library of Munich, Germany.
    11. Xiaohua Yu & David Abler, 2010. "Interactions between cigarette and alcohol consumption in rural China," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 11(2), pages 151-160, April.
    12. Kuiyun Zhi & Jin Huang & Suo Deng & Yongjin Chen & Michael G. Vaughn & Zhengmin Qian, 2016. "Decreased smoking initiation among male youths in China: an urban–rural comparison," International Journal of Public Health, Springer;Swiss School of Public Health (SSPH+), vol. 61(4), pages 417-425, May.
    13. Songjune Kim & Barry J. Seldon, 2004. "The Demand for Cigarettes in the Republic of Korea and Implications for Government Policy to Lower Cigarette Consumption," Contemporary Economic Policy, Western Economic Association International, vol. 22(2), pages 299-308, April.
    14. Budi Hidayat & Hasbullah Thabrany, 2010. "Cigarette Smoking in Indonesia: Examination of a Myopic Model of Addictive Behaviour," IJERPH, MDPI, vol. 7(6), pages 1-13, June.
    15. Jie-Min Lee & Sheng-Hong Chen, 2008. "The effects of price and smoking risk information on the demand for tobacco in Taiwan: an empirical study," Applied Economics, Taylor & Francis Journals, vol. 40(13), pages 1757-1767.
    16. Abdulbaki Bilgic & Wojciech Florkowski & Cuma Akbay, 2010. "Demand for cigarettes in Turkey: an application of count data models," Empirical Economics, Springer, vol. 39(3), pages 733-765, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cdl:ctcres:qt5x2015sv. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Lisa Schiff (email available below). General contact details of provider: https://escholarship.org/uc/ctcre/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.