BUSINESS

[Moon in Office] Cigarette taxes to remain at current level under Moon

By Won Ho-jung
  • Published : May 10, 2017 - 14:27
  • Updated : May 10, 2017 - 17:01
Korea’s new president will not consider lowering the excise tax on cigarettes, according to a spokesman for the administration Wednesday.

“Instead of lowering the tax, we are looking into the possibility of creating tax-free cigarettes for low income consumers,” Moon Jae-in’s spokesman Hong Ik-pyo told The Korea Herald on Wednesday.

No timeframe has been set for the introduction of the lower-priced cigarettes, according to Hong.
Cigarettes for sale at a convenience store (Yonhap)

The excise tax on cigarettes was hiked by the previous administration at the start of 2015, raising the price per pack from 2,500 won ($2.20) to 4,500 won. The move was widely criticized as being a regressive tax and one that did not significantly lower cigarette consumption.

According to market research firm Nielsen Korea earlier this year, cigarette consumption in 2016 rose 9.3 percent from 2015, showing that the effect of higher prices on cigarettes had mostly dissipated.

During his campaign, Moon said that the excise tax was unfairly burdensome on low income smokers. However, industry watchers did not expect Moon to lower the tax, saying that the increased tax revenue would be necessary to fund other campaign pledges. 

By Won Ho-jung (hjwon@heraldcorp.com)