Analysts predict tax hikes in Korea

Analysts in South   Korea are predicting that the incoming Park Geun-hye government will raise cigarette taxes to fund social welfare programs, according to a story in The Korea Herald.

This prediction is being made despite the fact that the Ministry of Strategy and Finance has denied that policymakers are poised to raise cigarette prices or create a new tax on these products.

One analyst apparently supported the idea that cigarette taxes would be increased by pointing to the results of government research that estimates it would raise an extra WON2.67 trillion if the price per pack were raised by Won500, and an additional WON4.46 trillion if the price were increased by WON1,000 per pack.

Last year, the Ministry of Health and Welfare said that it wanted to see the price of a pack of cigarettes increased to WON5,000, double the current average price.

In the light of the fact that some health ministry officials raised the possibility of a number of increases over time, some analysts expect an increase of WON500 this year and WON1,000 increases in each of 2014 and 2015.

Korea, with a 44.3 per cent smoking incidence, is said to have the second-highest smoking rate among the countries of the Organization of Economic Co-operation and Development.

Greece is first, with 46.3 percent, Turkey third with 43.8 per cent and Japan fourth with 38.9 per cent.