Gov't proposes cigarette price hike
By Kim Rahn
The government announced a plan Thursday to raise
cigarette prices from an average of 2,500 won per pack to 4,500 won starting
next year, in an attempt to curb the country's high smoking rate.
Health and Welfare Minister Moon Hyung-pyo announced a set of anti-smoking measures including the 80-percent price increase.
Non-smokers mostly hailed the move, while smokers strongly protested.
The plan needs approval from the National Assembly.
It seems unlikely that the government will succeed in raising cigarette prices to that extent, as many lawmakers from both the ruling and opposition parties say that such a severe hike would not work and would instead only increase the financial burden on people in low-income brackets.
It will be the first tobacco price hike in 10 years. In 2004, the price increased to 2,500 won per pack from 2,000 won.
"We'll seek to raise tobacco prices by 2,000 won as of Jan. 1," Moon said in a media briefing. "We also plan to adopt a new pricing system in which cigarette prices will go up in line with other consumer prices."
The government said the current price, 2,500 won per pack, was the lowest among 22 Organization for Economic Cooperation and Development (OECD) member countries that an EU study looked at in 2012. As might be expected, Korea's smoking rate is very high ― the OECD's 2014 health data showed that 37.6 percent of Korean males over the age of 15 were everyday smokers, the second-highest among the organization's 34 nations, with the highest rate being Greece's 43.7 percent.
At present, taxes account for 62 percent of the price of a pack of cigarettes. Under the new plan, however, this figure would increase to 73 percent, the government said.
"Around 14 percent of the current price of a pack of cigarettes is spent on health promotion policies," Moon said. "Now with the price increase, we'll raise that amount to 18.7 percent, and will expand financial support for anti-smoking therapies."
The government will also oblige tobacco companies to print images on cigarette packages showing the harmful effects of smoking; so far they carry only verbal warnings. Cigarette advertisements will also be banned at retail stores.
"We believe the measures can lower the nation's smoking rate more significantly than the previous price increase in 2004," Moon said, adding that the smoking rate for adult men had declined from 57.8 percent in 2004 to 50.3 percent in 2005 and 45.9 percent in 2006. The government seeks to lower the rate to 29 percent by 2020.
The government said these measures were expected to decrease tobacco consumption by 34 percent.
"The hike comes mostly from tax increases, so it may generate an additional 2.8 trillion won in tax revenues," Moon said. "Also, social expenses for cigarette-related diseases will decrease."
Health and Welfare Minister Moon Hyung-pyo announced a set of anti-smoking measures including the 80-percent price increase.
Non-smokers mostly hailed the move, while smokers strongly protested.
The plan needs approval from the National Assembly.
It seems unlikely that the government will succeed in raising cigarette prices to that extent, as many lawmakers from both the ruling and opposition parties say that such a severe hike would not work and would instead only increase the financial burden on people in low-income brackets.
It will be the first tobacco price hike in 10 years. In 2004, the price increased to 2,500 won per pack from 2,000 won.
"We'll seek to raise tobacco prices by 2,000 won as of Jan. 1," Moon said in a media briefing. "We also plan to adopt a new pricing system in which cigarette prices will go up in line with other consumer prices."
The government said the current price, 2,500 won per pack, was the lowest among 22 Organization for Economic Cooperation and Development (OECD) member countries that an EU study looked at in 2012. As might be expected, Korea's smoking rate is very high ― the OECD's 2014 health data showed that 37.6 percent of Korean males over the age of 15 were everyday smokers, the second-highest among the organization's 34 nations, with the highest rate being Greece's 43.7 percent.
At present, taxes account for 62 percent of the price of a pack of cigarettes. Under the new plan, however, this figure would increase to 73 percent, the government said.
"Around 14 percent of the current price of a pack of cigarettes is spent on health promotion policies," Moon said. "Now with the price increase, we'll raise that amount to 18.7 percent, and will expand financial support for anti-smoking therapies."
The government will also oblige tobacco companies to print images on cigarette packages showing the harmful effects of smoking; so far they carry only verbal warnings. Cigarette advertisements will also be banned at retail stores.
"We believe the measures can lower the nation's smoking rate more significantly than the previous price increase in 2004," Moon said, adding that the smoking rate for adult men had declined from 57.8 percent in 2004 to 50.3 percent in 2005 and 45.9 percent in 2006. The government seeks to lower the rate to 29 percent by 2020.
The government said these measures were expected to decrease tobacco consumption by 34 percent.
"The hike comes mostly from tax increases, so it may generate an additional 2.8 trillion won in tax revenues," Moon said. "Also, social expenses for cigarette-related diseases will decrease."
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