The application by Yunnan authorities to sell 400,000 more cartons of cigarettes in order to raise tax revenue to spend on earthquake relief makes me feel very uncomfortable.
At present, it's common to see local governments short of money. In the first seven months of this year, the national fiscal revenue increased 11.6 percent year-on-year. However, the growth rate dropped by 18.9 percentage points and the fiscal situation of local governments is not optimistic, with a deficit gap of 1.5807 trillion yuan ($249.6 billion).
In cases of sudden disaster, local governments are very likely to be stretched in dispatching relief and financial resources. Therefore, it is reasonable for the Yunnan government to raise relief funds by using every means available after the earthquake. Nevertheless, we can't help suspect the real motives behind applying for an increased quota to sell more cigarettes are quite different.
Tobacco industry is highly controversial. China has become the world's largest tobacco producer and consumer, with more than 300 million smokers. It is estimated that Chinese deaths from smoking will exceed 3 million annually by 2050. The tobacco industry remains the foremost source of revenue for certain local governments. However, the idea of using increased tobacco production to raise relief funds is not only contrary to the national tobacco control commitment, but also comes at the expense of public health.
Some local governments have recently introduced huge investment plans while claiming they are short of money. According to incomplete statistics, during July and August alone, the announced investment plans have accumulated to over 10 trillion yuan, with foundations for skyscrapers springing up all over the country.
Claiming a lack of funds for disaster relief is, in some areas, thus a deception. It's not due to a lack of capability, but due to what they choose to spend the money on instead.
Obviously, selling cigarettes to raise relief funds for the local government is not the best choice. Other means can be used to play a positive role in reconstruction, such as tax relief for businesses and individuals in the affected areas, preferential interest rates for loans, and the implementation of fiscal and monetary policies to encourage imports and exports in disaster areas.
In the long run, the local governments should get rid of excessive dependence on toxic industries by making efforts to transform the economic development mode and adjust the industrial structure.
The author is director of Labor and Social Security Department in the University of International Business and Economics. email@example.com
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