Levy of Leaf Tobacco Tax Not to Impact Cigarette Pricing

Source from:  Shanxi Evening newspaper 07/06/2006

The levy of leaf tobacco tax instead of the former special farm produce tax on leaf tobacco in China will not impact the pricing of tobacco products and will not lead to any increase in the economic burden on tobacco growers in China, a senior tax official said recently. On April 28, 2006, the State Council - the highest governing body in China - promulgated the Provisional Regulations on Leaf Tobacco Tax - a set of administrative regulations prescribing the levy of leaf tobacco tax instead of the former special farm produce tax on leaf tobacco. The Provisional Regulations on Leaf Tobacco Tax has become effective as of the date of promulgation, providing legal basis for the levy of the leaf tobacco tax in China. In a recent interview with the Shanxi Evening News newspaper, a top official with north China's Shanxi Provincial Local Taxation Bureau explained that as rate of the newly introduced leaf tobacco tax is also 20 percent - the same as the rate of the former special farm produce tax on leaf tobacco, the new tax would not impact the pricing of cigarette. "After the abolishment of the special produce tax in China, the former special farm produce tax on leaf tobacco was converted into leaf tobacco tax," the official said. The official noted that the former special farm produce tax on leaf tobacco was payable by tobacco companies at the process of purchasing leaf tobacco, and that after the introduction of new tax, the legal provisions for taxpayers, taxation and computation of tax payable remained unchanged. Explaining the substitution of the leaf tobacco tax for the former farm produce tax on leaf tobacco, leaders of the Legislative Affairs Office of the State Council, the Ministry of Finance and the State Administration for Taxation told Chinese news media earlier that that the introduction of the new tax would neither impact the pricing of tobacco products, nor affect existing taxation on the tobacco industry. Enditem