Tobacco excise tax reform: From the perspective of tax to control tobacco policy in China

The consumption of tobacco is harmful to health and has huge social costs. Tax to control tobacco is a widely implemented tobacco control measure all over the world. In order to examine the achievements of two tobacco excise tax reforms in China in 2009 and 2015 on controlling tobacco consumption, we first establish an intertemporal consumption model for addictive goods, and then validate the effectiveness of the two tobacco excise tax reforms using a Continuous Difference-in-Differences Model based on the panel data from 294 cities in China from 2007 to 2018. The results show that the tobacco excise tax reform in 2015 considerably reduced tobacco consumption, while the reform in 2009 did not, providing empirical evidence on the importance of price links to tax for tobacco control. Additionally, the study discovers that the tax reform has a heterogeneous effect on the age of smokers, the price of cigarettes, and city size.

Automated summary

The consumption of tobacco has negative impacts on health and society. Tobacco taxes have been implemented globally as a means of controlling tobacco consumption. This study examines the effects of two tobacco excise tax reforms in China in 2009 and 2015 on tobacco consumption. Using a consumption model for addictive goods and panel data from 294 Chinese cities from 2007 to 2018, the study finds that the 2015 tax reform significantly reduced tobacco consumption, while the 2009 reform did not. The study provides empirical evidence on the importance of price in tobacco control and identifies heterogeneous effects on smoker age, cigarette prices, and city size.