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“The tobacco industry has generated a huge amount of tax revenue, so it’s hard for the government to resolve to trim it,” Yang said. The World Health Organization (WHO) recently scored the countries that participated in the tobacco control convention and gave China a 37.3—one of the lowest ratings.
Many are asking why the government seems so ambivalent despite the harm tobacco inflicts upon citizens. According to Yang and Wu Yiqun, the deputy director of the Think Tank Research Center for Health Development, it’s largely due to the Ministry of Industry and Information Technology’s lack of leadership and general disorganization.
In 2007, China set up a tobacco-control group led by the Ministry of Industry and Information Technology. It was responsible to fulfill China’s commitment from the 2006 convention. However,[link widoczny dla zalogowanych], the same ministry simultaneously oversees China National Tobacco Corp., the largest tobacco manufacturer in the world by sales.
Yang said it’s a precarious and conflicting position for the ministry. “The ministry plays dual roles, as if in a sporting event one player also served as referee,” Yang said. In November 2010, the countries that participated in the convention gathered in Uruguay to discuss the regulations on controlling tobacco ingredients and revealing their negative effects.
However, the Chinese delegate strongly protested and explained that tobacco is a key industry for China. That protest won the Chinese delegate the “Dirty Ashtray” nomination. Wilson Farms officials say the chain was on track for a year of record sales and profits until the tax hike took effect July 1, raising the total state excise tax per pack to $4.35, the nation’s highest.
The chain’s cigarette sales are down 30 percent to 40 percent from a year ago,[link widoczny dla zalogowanych], and its overall store sales are down 8 percent to 10 percent,[link widoczny dla zalogowanych],[link widoczny dla zalogowanych], Nanula said. “We have to right-size our organization and there are jobs frankly lost because of that,[link widoczny dla zalogowanych],[link widoczny dla zalogowanych],” he said.
Nick Gallegos, Wilson Farms’ vice president of sales and marketing, said the tax hike is leading more New York State residents to buy their cigarettes at reservation stores, on the Internet, or in lower-cost Pennsylvania if they live close to the border. Those buying trends subtract from tax revenues the state was counting on, Gallegos said.
Yet,[link widoczny dla zalogowanych], from July through October, state tax revenues from cigarettes and tobacco products increased 24 percent from the same four-month period in 2009, before the $1.60 hike was in effect, according to state sales tax figures.
James Calvin,[link widoczny dla zalogowanych], president of the New York State Association of Convenience Stores, an Albany-based trade group, said while cigarette tax revenues have risen since July 1, the rate of increase is far short of the 58 percent per pack hike. That outcome is hurting convenience store operators, he said.