Tax hike increases South Korea’s revenue sharply

South Korea’s cigarette tax revenue during the first five months of this year was up sharply on that of a year earlier, according to a Yonhap News Agency story citing government data.

The increase was said to have been due mainly to a tax hike at the start of this year that took the price of a pack of cigarettes from WON2,500 to WON4500.

According to finance ministry data, the government collected WON880 billion more in cigarette taxes in the January-May period than it had collected during the same period of last year.

Should the current pace of cigarette tax collections continue, the total revenue from cigarette sales is expected to surpass WON10 trillion this year, up from WON6.74 trillion in 2014.

At the same time, retail cigarette sales have picked up as the pre-tax-hike stocks built up by some smokers have run dry.

But overall, the ministry said, tobacco product shipments had tumbled by 31 percent.
“The overall decline is similar to what the government had estimated [34 percent], with the difference caused by the delayed passage of a bill that would make it mandatory to put very large health warnings on cigarette packs,” a ministry official said.

He said the bill should be passed by parliament late this month.