Optimisation Of China’s E-Cigarette Consumption Tax System And Impact Study

With the worldwide popularity of e-cigarettes,more and more studies have shown that ecigarettes have certain health risks.In order to promote the construction of "Healthy China",whether from the viewpoint of the danger of electronic cigarettes themselves,or from the role of consumption tax,China is necessary to impose excise taxes on electronic cigarettes.From November 1,2022,China officially started to levy excise tax on e-cigarettes.But China’s research on e-cigarette excise tax has just started,and there are gaps in the tax policy impact simulation and research on the impact of taxation policies and the optimization of the system of e-cigarette consumption tax in controlling tobacco consumption.This paper aims to explore this area that has not yet been studied in depth.This paper first defines the concepts related to electronic cigarettes,and combines with the Electronic Cigarette Management Measures to define the types of electronic cigarettes allowed to circulate in China’s market.The electronic cigarette components,including ecigarette smoking devices,e-cigarette oils,etc.,are collectively referred to as electronic cigarette products.Then this paper bases on economic theory to establish the theoretical basis of excise tax on e-cigarettes and the mechanism of the role of excise tax on e-cigarettes in controlling consumption.Secondly,this paper combines the actual development and regulation of China’s e-cigarette market,and examines the positive and negative factors affecting the implementation of the ecigarette excise tax from the perspectives of China’s e-cigarette regulatory status,tax collection and management capacity,international experience,and the price situation of the e-cigarette market.Then,on the basis of the system design of the current e-cigarette excise tax,an overall evaluation of the current e-cigarette excise tax design is made,and the possible problems of China’s current e-cigarette excise tax design are summarised in relation to the current tax system.Again,based on the current excise tax system for e-cigarettes,this paper simulates the impact of the excise tax on e-cigarette sales,the number of e-cigarette users,cigarette consumption and tobacco tax revenues based on the price elasticity of demand,the elasticity of participation and the cross-price elasticity between e-cigarettes and cigarettes.The main conclusions are:(1)after the introduction of the excise tax on e-cigarettes,with the increase in the sales price of e-cigarettes,the sales of e-cigarettes will decline in the short term,and the number of users will also decline,and the magnitude of changes in the sales and number of users of e-cigarettes is affected by the price elasticity of demand for e-cigarettes: the greater the elasticity,the greater the decline in the sales price and number of users of ecigarettes;(2)As the price of e-cigarettes rises,under the influence of the cross-price elasticity between e-cigarettes and cigarettes,the amount of cigarette use increases significantly and increases with the increase in the excise tax rate on e-cigarettes,but because the repetition rate of the population using e-cigarettes and cigarettes is high in China,the introduction of an excise tax on e-cigarettes will hardly increase the number of people consuming cigarettes,and the change in the number of people consuming cigarettes will not be significant and will only have a certain impact on the number of people consuming cigarettes;(3)From an overall perspective,the excise tax on e-cigarettes will increase tobacco tax revenue,and the increase in tobacco tax revenue is affected by the elasticity of demand for e-cigarettes,and is consistent with the relationship between tax revenue and tax rate as expressed in the Laffer curve: all other things being equal,if the elasticity of demand for e-cigarettes is small,a higher excise tax rate on e-cigarettes will generate more tobacco tax revenue;and if the elasticity of demand for e-cigarettes is If the demand for e-cigarettes is very high,the increase in revenue will instead decrease as the tax rate increases.By collating the collection practices of some countries’ e-cigarette excise taxes,this paper also analyses the problems and effects of e-cigarette excise taxes in the United States,South Korea and Russia,and draws lessons for optimising the design of China’s e-cigarette excise tax system and its tax collection and management.Finally,the analysis concludes that the introduction of an excise tax on e-cigarettes can effectively achieve the goals of controlling e-cigarette consumption and raising revenue,but there is still room for further optimisation of the design of China’s current e-cigarette excise tax system and its collection and management.The specific policy recommendations are:moving back the collection link of e-cigarette excise tax,appropriately increasing the ecigarette excise tax rate,reasonably dividing the e-cigarette excise tax revenue;appropriately adjusting the cigarette excise tax rate to maintain the price balance between e-cigarettes and cigarettes,and improving relevant supporting measures to ensure the collection and management of e-cigarette excise tax.