In an effort to cut the number of smokers in China, which now stands at 350 million, experts have proposed raising the tax on cigarettes - but the idea is not without its critics. Our reporter Zhang Cheng has more.

Reporter:
China now imposes a 40 percent general tax rate on cigarettes, much lower than the international average rates of 65 percent to 70 percent.

Experts say if the tax on every pack of cigarettes were raised to one yuan from the current less than 0.1 yuan, an estimated 14 million people would quit smoking. And the government may garner 65 billion yuan or 9 and a half billion US dollars in additional tax revenue.

Dr. Yang Gonghuan, deputy director of China's Centre for Disease Control and Prevention, agrees with their sentiments.

"Raising prices of cigarettes is certainly the most effective solution for tobacco control, especially for low-income citizens and youngsters, because they are most sensitive to price hikes."

But Dr. Zhou Yangmin, a scholar on tobacco control, notes that although the tax increase would undoubtedly bring about more tax revenue in the long run, it would cut profits and taxations of tobacco enterprises in the short term. Therefore resistance to the initiative would be inevitable.
He adds the current adverse economic conditions would also hinder the tax increase from being put into practice.

"Under the present situation, I think the government is not likely to raise the tax rate in the near future, given that tobacco revenue is one of the largest sources of the country's tax revenues."
Contrary to these sentiments, Dr. Yang Gonghuan believes it's viable to introduce the economic leverage now, calling for a reform of the cigarette tax system.

"The tax on cigarettes is now combined by ad valorem and specific taxes in China. The ad valorem tax is imposed according to the prices of products. And the specific tax is levied according to the physical quantity of the products sold. So tobacco enterprises used to arbitrarily adjust the prices of their products in order to pay less taxation, and subsidize low-price cigarettes with the profits made by high-price products. Under the current tax system, it's hard to tell how the tax increase would affect people's desire to buy cigarettes."

The research paper proposes that the government adopt a fixed ad valorem tax rate, and adjusts the specific tax rate in line with the fluctuation of inflation.

Zhang Cheng, CRI News.