The Tobacco Excise Tax Reform

China is the largest tobacco producer and consumer in the world.The smoking rate of people over 15 is up to 27.7%,and beginning-smoking among teenagers gets advanced.Smoking seriously damages health.In China,1 million people each year,which roughly equate to 3 thousand people per day,die from smoking.According to the World Health Organization(WHO),the total cost of tobacco use in China in 2014 accounts for 0.55% of the total GDP,which means it is urgent to control tobacco.WHO put forward MPOWER to guide tobacco-control,and noted that tax is the most effective one.However,the effects of tobacco excise tax on tobacco control are,in reality,weak.What are the reasons for this failure? How should China respond? This is the topic of this paper.Firstly,based on economics principle,such as negative externality and information asymmetry,as well as the fact that tobacco excise tax serves as an important role in all taxes related to tobacco industry,the rationality of levying excise tax on tobacco is discussed.Besides,comparative analysis between different excise tax elements choices forms the foundation for the reason analysis and policy recommendations.Secondly,this paper described the current status of tobacco consumption,and found that tobacco consumption rapidly rose,the sales was mainly based on third or fourth types of cigarettes,and the younger began smoking ever earlier.Thus,this paper proposes a tobacco control strategy,that is to control increment,reduce stock.Various tobacco control measures,unfortunately,gained a general effect on tobacco control.In addition to the unique social attributes of tobacco products in China,the imperfection of various tobacco control measures is a big reason.In particular,there is still much room for improvement of tobacco excise tax,which serves as a main means of tobacco control.Based on the characteristics of tobacco consumption in China and the mechanism of tobacco control by tax,this paper points out that the reasons for failure in tobacco control can be summarized as the failure in linkage between price and tax,over-reliance on ad valorem tax,the low tax burden in tobacco,and the decreasing tobacco affordability.Subsequently,this paper introduces the successful tobacco control experience in the United States,Brazil,and the Philippines.Combined with the status of China's tobacco excise tax and future reform trend,this paper proposes to increase the proportion of specific tax,implement the index of tax rate to inflation,simplify tobacco tax system.To improve supporting-measures,it is proposed to establish an official tobacco control agency at the national level,strengthen tobacco product control,and enhance the smoking cessation service system.In the end,based on the input-output model,this paper measures the impact of tobacco excise tax reform,and quantifies the effect of policy proposals.It is found that tax increase can not only reduce tobacco consumption,but also increase government revenue.It is a win-win strategy,which should serve as an important tobacco control method.Besides,tobacco control should be taken into consideration of tobacco excise tax reform.