The impact of cigarette tax increases on the cigarette industry and tobacco farming using different price elasticities
| Recent tax adjustment | Increase in specific excise tax of additional 1 RMB | |
| Impact on cigarette industry | ||
| Reduction in cigarette consumption (billion packs) | ||
| 0.15* | 0.54 | 3.0 |
| 0.50* | 1.82 | 9.90 |
| Total sales revenue loss (billion RMB)† | ||
| 0.15 | 2.08 | 11.94 |
| 0.50 | 6.86 | 39.40 |
| Industry net revenue loss (billion RMB) | ||
| 0.15 | 1.17 | 6.71 |
| 0.50 | 3.85 | 22.15 |
| Industry employment loss (number of employees) | ||
| 0.15 | 279 | 1606 |
| 0.50 | 936 | 5382 |
| Impact on tobacco farming | ||
| Reduction in tobacco leaf (in tons)§ | ||
| 0.15 | 4397 | 25271 |
| 0.50 | 14734 | 84677 |
| Reduction in land use (in hectares)¶ | ||
| 0.15 | 2429 | 13960 |
| 0.50 | 8139 | 44778 |
| Reduction in farmers' revenue (in millions RMB)** | ||
| 0.15 | 44 | 253 |
| 0.50 | 147 | 847 |
| Reduction in local government tax (in millions RMB)†† | ||
| 0.15 | 8.7 | 50 |
| 0.50 | 29.4 | 169 |
Notes:
↵* Price elasticity.
↵† Total sales revenue loss is the producer price 3.98 RMB (6.64–2.66) RMB per pack multiplied by the reduction in consumption.
‡ Figures obtained from table 2.
↵§ 0.041 tons of tobacco leaf produce 1 case of cigarettes (50 000 cigarettes).6
↵¶ Average productivity is 1.81 tons per hectare.
↵** Average government purchase price was 500 RMB per 50 kg, 10 000 RMB per ton (1 ton=1000 kg).
↵†† 20% special tobacco leaf tax.