The South Korean government wants to increase cigarette prices by 80 percent next year. Under the proposal, a KRW2,500 ($2.42) pack would cost KRW4,500 come Jan. 1. The government would also start adjusting cigarette prices to inflation rates, which would result in more frequent cigarette price rises in the future. Cigarette prices in Korea have been flat since 2004.
The government hopes its proposal will increase revenue and reduce smoking. At 44 percent in 2013, South Korea’s male smoking rateis the highest among Organization for Economic Cooperation and Development countries. The government wants to reduce that figure to 29 percent by 2020.
The Ministry of Strategy and Finance expects the price hike to cause a 34 percent drop in overall sales of tobacco products and generate an additional KRW2.8 trillion in tax revenues.
Korea’s cigarette prices are currently among the lowest in the world, while its tobacco tax rates are below the World Health Organization’s recommendation of 70 percent.
Tobacco companies cautioned that the measure would encourage smuggling from countries such as China, where tobacco prices are much lower. It also warned of an increase in consumption of illegally produced, low-quality cigarettes, which may be more harmful to health than higher-quality varieties.