The government has announced a drastic increase in cigarette prices to fight cigarette smoking, which is a serious problem in Korea. The announcement included nonprice-related antismoking programs like tougher packaging rules and restrictions on advertisements of tobacco products at retail shops.
The “comprehensive antismoking measures,” announced by Health and Welfare Minister Moon Hyung-pyo on Thursday, are the most radical yet as they call for raising cigarette prices to 4,500 won from the current 2,500 won through increasing taxes and levies. In view of the 80 percent increase, it may well be said that the government has declared war on tobacco consumption.
The hike in taxes and consequently the price of cigarettes is long overdue, in view of the high smoking rate and the low cigarette prices in the country.
Korea has the highest smoking rate for adult males, at 44 percent, among Organization for Economic Cooperation and Development countries, compared with an average of 25 percent for the 34 member states.
About 58,000 people here die from smoking-related diseases each year and tobacco use incurs 6 trillion won to 7 trillion won in socioeconomic costs, according to government statistics. This is absurd as deaths and diseases from smoking can be prevented.
Cheap cigarette prices are blamed for the high smoking rate. The average price of a pack of Korean cigarettes, at 2,500 won, is the lowest in the OECD. Worldwide, the average price is 7,000 won and in countries like Norway a pack costs over 16,000 won.
The World Health Organization, whose antismoking campaign this year focuses on pushing governments to increase tobacco taxes, says raising taxes on tobacco is the most effective policy to reduce its use. It specifically suggests that each signatory of the Framework Convention on Tobacco Control increase the excise tax on tobacco by 50 percent.
A WHO study showed that a 10 percent tax increase on tobacco prices decreases tobacco consumption by about 4 percent in high-income countries and by up to 8 percent in most low- and middle-income countries.
Korean officials said the proposed price hike is expected to cut sales of tobacco products by 34 percent. This forecast does not seem overly optimistic in view of the fact that the last price hike in 2004, by 500 won, reduced the smoking rate by 15 percent.
The Korean Society for Research on Nicotine and Tobacco backs up the government projection: It says that a 10 percent increase in tobacco prices will reduce tobacco consumption by 4 percent, mostly among low-income and youth groups. A recent survey found that 32.3 percent of smokers would quit smoking if a pack of cigarettes cost 4,500 won or more.
These statistics give little ground to opponents of the proposed cigarette price hike, including the main opposition New Politics Alliance for Democracy. The party spoke misguidedly when it said that the price hike was a “deceitful move” only aimed at making up for the revenue shortfall by emptying the pockets of those in the low-income bracket.
It is true that the increase of the “sin tax” will add trillions of won to the coffers of the government, which is in dire need of more revenue to meet welfare and other expenses.
The government, therefore, should push more nonprice-related policies aimed at lowering the smoking rate and make sure the new tax revenues are not diverted to spending programs unrelated to antismoking and health programs.