• September 25, 2023

Taxing smokers

 Taxing smokers

Cigarette sales in South Korea have fallen less than they had been expected to during the past two years, while tobacco tax revenue has far outstripped government forecasts, according to a Yonhap News Agency story quoting the Korea Taxpayers’ Association (KTA).

At the start of January 2015, the government hiked cigarette taxes so that the price of cigarettes rose by 80 percent, from 2,500 won (US$2.19) per pack to 4,500 won.

At that time, the finance ministry expected the country’s cigarette sales to fall by about 34 percent from 4.36 billion packs in 2014 to about 2.87 billion packs in 2015 and 2016.

But South Korean smokers bought 3.33 billion tax-paid packs in 2015 and 3.66 billion tax-paid packs last year, which meant that sales were down by 23.4 percent and 15.9 percent respectively from those of 2014.

The ministry had forecast also that the tax revenue would increase by 2.78 trillion won ($2.44 billion) in 2015 and 2016, measured against the revenue of 2014.

But the actual sales amounted to 3.53 trillion won and 5.39 trillion won respectively.

The KTA predicted that the current trend would last ‘for the time being’.

On the basis that about 1.1 billion packs were sold in the first four months of this year, cigarette sales are expected to reach 3.52 billion packs during 2017, and the tobacco tax revenue is forecast to increase to 11.5 trillion won.

Kim Sun-taek, head of the KTA, slammed government policy, claiming high tobacco taxes had imposed a big burden on the underprivileged. Various taxes accounted for more than 60 percent of the tobacco price in South Korea, he said.