South Korea fears tax hike might trigger profiteering

The government of South Korea said yesterday that it will clamp down on any cigarette manufacturers that might have hoarded cigarettes ahead of tomorrow’s huge, mainly tax-induced price rises, according to a story in The Korea Herald.

The finance ministry reportedly said that police and officials from the tax and customs department planned to check the inventories and sales records of all manufacturers to make certain they were not holding for sale in 2015 products they had claimed to have shipped out during 2014.

If a company were to operate in this way, it would be able to pocket at least part of the difference between the amount of tax due in 2014 and that due in 2015 – a considerable amount.

The government announced earlier this year that cigarette taxes would increase by an average of WON2,000 a pack, a massive rise given that, pre-increase, some cigarettes were selling for WON2,000 a pack.

The hike is due to the imposition of a special excise tax and other indirect taxes on cigarettes.

Meanwhile, the government says that it plans to keep tabs on cigarettes sold through the Internet.

The Herald reported ‘official sources’ as saying that some individuals had bought cigarettes in 2014 so as to hoard them before selling them for a profit in 2015.