Table 4.

The impact of cigarette tax increases on the cigarette industry and tobacco farming using different price elasticities

	Recent tax adjustment	Increase in specific excise tax of additional 1 RMB
Impact on cigarette industry
Reduction in cigarette consumption (billion packs)
0.15*	0.54	3.0
0.50*	1.82	9.90
Total sales revenue loss (billion RMB)†
0.15	2.08	11.94
0.50	6.86	39.40
Industry net revenue loss (billion RMB)
0.15	1.17	6.71
0.50	3.85	22.15
Industry employment loss (number of employees)
0.15	279	1606
0.50	936	5382
Impact on tobacco farming
Reduction in tobacco leaf (in tons)§
0.15	4397	25271
0.50	14734	84677
Reduction in land use (in hectares)¶
0.15	2429	13960
0.50	8139	44778
Reduction in farmers' revenue (in millions RMB)**
0.15	44	253
0.50	147	847
Reduction in local government tax (in millions RMB)††
0.15	8.7	50
0.50	29.4	169

Notes:

^*Price elasticity.

^†Total sales revenue loss is the producer price 3.98 RMB (6.64–2.66) RMB per pack multiplied by the reduction in consumption.

^‡Figures obtained from table 2.

^§0.041 tons of tobacco leaf produce 1 case of cigarettes (50 000 cigarettes).⁶

^¶Average productivity is 1.81 tons per hectare.

^**Average government purchase price was 500 RMB per 50 kg, 10 000 RMB per ton (1 ton=1000 kg).

^††20% special tobacco leaf tax.