Table 1

Factory price of different grades of cigarettes in 2006 in China

 Grades of cigarettes Price per carton before VAT (¥) Ad valorem tax rate 1 50> 45% 2 30–49 30% 3 15–30 30% 4 10–14 30% 5 <10 30%
• Grades 4 and 5 are defined as ‘low-level cigarettes’, grades 1 and 2 are defined as ‘high-level cigarettes’ and grade 3 is defined as ‘medium-level cigarettes’.

• VAT, value added tax.