Taxes on taxes on taxes…

The retail price of refill packs of heat-not-burn (HNB) cigarettes is likely to rise to more than 5,000 won ($4.59) next year following the passing of another bill to raise taxes on these products, according to a story in The Korea JoongAng Daily.

The National Assembly voted on Friday to raise taxes by 532 won to 1,292 won. The bill will go into effect next month.

Last month, the assembly passed a bill to hike a special consumption tax on these products by 403 won to 529 won. The tax increase was applied from this month but has not affected prices.

And yet another bill is waiting for a vote later this month on whether to raise the ‘special charges’ on these products for the so-called ‘National Health Promotion’ from 438 won to 750 won. Industry sources say this vote is highly likely to pass.

If next month’s bill goes through, the total amount of taxes imposed on heat-not-burn cigarette-refills will rise to 2,986 won from 1,739 won earlier this year.

That would be an increase of about 72 percent and would bring the taxes imposed on HNB products to about 90 percent of those imposed on combustible cigarettes, 3,323 won.

All three heat-not-burn cigarette refills in Korea – used with Philip Morris International’s IQOS, British American Tobacco’s glo and KT&G’s lil – have been selling for 4,300 won for packs of 20.

This has made them slightly cheaper than combustible cigarettes, most of which sell for 4,500 won for 20.

The tax increases on HNB products could make them more expensive than combustible products, though no manufacturer has revealed plans of by how much or when it will raise prices.

During the past few months, PMI and BAT have reacted to government tax rises by saying they are discussing the matter internally. But KT&G said at lil’s launch event last month that it was not considering a price rise, and it is maintaining that stance.