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Government mulls liquor price hike

The South Korean government is considering levying an additional tax on liquor, stirring up a heated public debate. 

The Ministry of Health and Welfare said Tuesday it is currently reviewing ways to increase the prices of liquor and tobacco, either by newly levying or increasing “health promotion fees” imposed on them.  

“Nothing has been confirmed on liquor or tobacco price hikes at this point,” a ministry official said. 

The ministry said the price hikes are not considered ways to make up for the expected drop in premium collections for the national health insurance scheme or increase the nation’s tax revenues.
(Yonhap)
(Yonhap)
Public worries have been mounting recently as the ministry announced a plan to overhaul the national health insurance system to reduce the burden on low-income earners, which will lead to a drop of nearly 900 billion won ($775 million) in contributions to the scheme in the first six years.    

The ministry said it plans to inject 20 trillion won into the program and work closely with the Ministry of Strategy and Finance and tax authorities to seek fiscal health.

In 2015, cigarette prices went up by 80 percent, from 2,500 won per pack to 4,500 won, as part of the government measures to decrease the country’s high smoking rate among adult males to 29 percent by 2020.

The increase of 2,000 won included hikes in the tobacco consumption tax, local education tax, health promotion payment and waste payment. The government also began imposing individual consumption tax on cigarettes.

It immediately drew mixed reactions, as some criticized whether such price hikes were for the people or to increase tax revenue. 

The latest government data showed the country’s cigarette sales edged up from a year earlier during the July-September period in 2016, up 0.6 percent from 980 million a year earlier to 990 million packs, despite the government-led anti-smoking campaign.
National Health Insurance Service (Yonhap)
National Health Insurance Service (Yonhap)
Meanwhile, the ministry-run National Health Insurance Service’s research center released a report last year suggesting the government should impose health promotion fees on liquor products. 

The paper concluded that liquor and tobacco are detrimental to public health and aggravate the costs of state health care programs here.

By Kim Da-sol (ddd@heraldcorp.com)
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