Tag: South Korea

  • HNB tax rise endorsed

    HNB tax rise endorsed

    A South Korean parliamentary committee has endorsed a bill aimed at raising the tax on heat-not-burn (HNB) cigarettes, according to a story in The Korea Times.

    The story, quoting ‘industry sources’ said the proposed rise would increase the retail price of the consumable element of HNB products, such as Philip Morris’ Heets and BAT’s Neostiks, from 4,300 won ($3.78) to 5,000 won a pack.

    Most combustible tobacco cigarettes retail for 4,500 won a pack, of which 3,323 won is tax.

    The National Assembly’s Strategy and Finance Committee passed the revision bill to the tobacco tax code on Friday. If the bill passes a forthcoming parliamentary plenary session, the higher tax will be implemented from mid-December.

    Philip Morris Korea confirmed that the proposed tax hike would push up the retail price of Heets, though it did not say by how much.

    A BAT Korea official said that the tax rise, as proposed, would have a huge impact, and that, BAT would have to think about increasing its prices.

    And KT&G expressed concern about the pricing of its new HNB device, LiL.

    But the Minister of Strategy and Finance, Kim Dong-yeon, said the chance of a price hike was low. Kim said the tax levied on HNB products in Japan was 80 percent of that levied on regular cigarettes, and HNB products were sold there for 460 yen, which was similar to the price of regular cigarettes.

  • E-cig imports double

    E-cig imports double

    Imports of electronic cigarettes into South Korea more than doubled after the government raised taxes on conventional tobacco at the beginning of 2015, according to a story in The Korea Herald citing government data.

    Industry sources attributed the sharp rise to smokers switching to e-cigarettes, which currently are exempted from the level of taxes imposed on traditional tobacco cigarettes.

    The government increased taxes on cigarettes by 2,000 won (US$1.70) per pack from January 1, 2015, raising the pack price to 4,500 won.

    And in 2016, it compelled tobacco companies to place graphic health warnings on the upper part of cigarette packs.

    Imports of electronic cigarette liquids were said to have reached 243 tons or 16 billion won (US$13.9 million) between January 2015 and August this year, according to figures from the Korea Customs Service. The figures for the period from January 2012 to August 2014 were 91 tons and 6.7 billion won.

    Imports of e-liquids containing nicotine hit 61 tons during the first eight months of this year, up from 12 tons during the first eight months of 2015 and 22 tons during the first eight months of 2016.

    And imports of vape kits increased to 269 tons, or 25.6 billion won, between January 2015 and August this year, up 55.5 percent from 173 tons and 79 percent from 14.3 million won between January 2012 and August 2014.

  • WHO calls for more bans

    WHO calls for more bans

    The World Health Organization has said that South Korea should adopt more stringent anti-tobacco regulations that ban cigarette smoking in public places and restrict tobacco advertising and promotions, according to a story in The Korea Herald.

    In 2015, 39.3 percent of South Korean men and 5.5 percent of its women were smokers.

    The Herald story said the WTO had been publishing the results of a project that every other year assessed a country’s efforts in various anti-tobacco activities.

    According to the WHO Report on the Global Tobacco Epidemic 2017, South Korea had not properly implemented policies on protecting the public from the effects of smoking, enforcing bans and raising taxes.

    This criticism was made even though the government increased taxes on cigarettes by 2,000 won (US$1.70) per pack from January 1, 2015, a move that increased the price of a pack of cigarettes from about 2,500 won to 4,500 won.

    The WTO calls on member states to ban smoking in all public places.

    But while South Korea has been expanding non-smoking zones in public places for the past few years such measures have fallen short of legislating a far-reaching ban.

    The WTO recommends also that member states ban all forms of advertising, promotion and sponsorship of tobacco, whereas South Korea allows such activities in some instances.

    Meanwhile, the government forced tobacco companies last year to include graphic warnings on their packs; and this year it introduced a new rule that requires the warnings to occupy more than 30 percent of the front and back of cigarette packs.

  • Flavored cigarettes ‘easier’

    Flavored cigarettes ‘easier’

    A recent study conducted in South Korea has shown that flavored tobacco ‘makes smoking easier and attracts new smokers’, according to a story in The Korea Biomedical Review citing the Korea Center for Disease Control and Prevention (KCDCP).

    Professor Kim Hee-jin of Yonsei University led a research team to identify the role of smoking flavored cigarettes in smoking cessation and persistence. The study looked at 9,063 subjects aged 13 to 39.

    The findings were said to have indicated that about 65 percent of the subjects used flavored cigarettes, and that usage levels were especially high among young people and women.

    ‘Among the research subjects, 73.1 percent of female smokers tended to smoke flavored cigarettes compared to 58.3 percent of male smokers,’ the Review reported.

    ‘By age, 68.3 percent of male subjects aged 13 to 18 and 82.7 percent of female subjects aged 19 to 24 smoked flavored cigarettes.’

    The reasons given by the subjects for choosing flavored cigarettes included pleasant smell, less odor, and little to no physical discomfort.

    Such characteristics were said also to have played a significant role in lowering perceptions of smoking hazards and health warnings.

    “The coarse and uncomfortable trait of cigarette smoke acts as a barrier in the initial stage of attempting to smoke cigarettes,” said Oh Kyung-won, a KCDCP official.

    However, he added, flavored cigarettes disguised these irritating properties, making it easier for people to try and maintain smoking than was the case in respect of non-flavored cigarettes.

    The Ministry of Health and Welfare plans to submit a bill to regulate flavored cigarettes after consulting with other related ministries and agencies.

  • Scramble for HNB sticks

    Scramble for HNB sticks

    With the South Korean government expected to raise taxes on the consumable sticks used in heat-not-burn (HNB) tobacco devices, an increasing number of vapers are stocking up on these products, according to a story in The Korea Bizwire.

    Sources within the convenience store industry said yesterday that sales of IQOS HEETS had increased drastically since reports emerged last week that the taxation committee of the National Assembly’s Strategy and Finance Committee had agreed to increase a special consumption tax imposed on HNB products.

    If the tax on HNB products increases as has been predicted, the price of a pack of 20 sticks is expected to rise from around 4,000 won – under the price of a pack of traditional tobacco cigarettes, 4,500 won – to 5,000 won.

    At the convenience-store chain 7-Eleven, sales of HEETS on August 22-27 increased by more than 60 percent on those of the previous week.

    Given a previous week-on-week sales increase of 1.7 percent, and given that other convenience-store chains are also experiencing strongly-increased sales, it seems clear that vapers are bulk purchasing ahead of the proposed tax hike.

    Meanwhile, according to a story by Song Seung-hyun for The Investor, the government is in need of additional tax revenue to fund the welfare pledges it has made.

  • HNB tax hike closer

    HNB tax hike closer

    Multinational tobacco companies are decrying what they see as South Korea’s policy inconsistency as lawmakers are poised to pass a revised bill to hike taxes on heat-not-burn (HNB) devices, according to a story in The Korea Times.

    Philip Morris International Korea and British American Tobacco Korea said they had launched these smokeless cigarette devices in Korea believing that tax rates and other regulatory standards would remain unchanged for a considerable time.

    PMI Korea began selling IQOS in May while BAT Korea introduced Glo this month. Twenty-piece packs of the devices’ consumable items, HEETs in the case of IQOS and Neostiks in the case of Glo, are currently priced at 4,300 won ($3.77).

    A pack of 20 traditional tobacco cigarettes retails for 4,500 won.

    The two companies argue that the National Assembly’s move to raise excise taxes levied on a pack of 20 HNB sticks from the current 126 won to 594 won is unfair and makes it difficult for them to do business in Korea. Smokers pay a 594 won excise tax when they buy a pack of traditional tobacco cigarettes.

    They argue that consuming HNB sticks is less risky than is consuming traditional cigarettes; so it is not fair to impose the same level of taxes on both.

    On Tuesday, the National Assembly Strategy and Finance Subcommittee passed a bill revision to increase the excise tax on HNB sticks to 594 won. And both ruling and opposition parties are expected to approve the revision in a plenary session later this month. The change would then go into effect in September.

    The lawmakers are also considering a consumption tax and a health-promotion fee for HNB products, which would force PMI and BAT to raise the prices of HEETs and Neostiks to as high as 6,000 won a pack.

  • HNB tax increase coming

    HNB tax increase coming

    The government of South Korea looks set to raise the tax on heat-not-burn (HNB) products such as Phillip Morris’ IQOS and British American Tobacco’s Glo, according to a story in The Korea Times.

    Three lawmakers proposed the tax revision and the National Assembly Strategy and Finance Committee (SFC) said on Monday it would discuss the matter with relevant government agencies.

    SFC members reportedly agreed with the lawmakers that the tax on IQOS and Glo was too low because of the absence of a tax code for HNB products.

    They will seek to pass a relevant tax-code revision during a plenary session of the National Assembly on August 31 with the aim of its going into effect in September.

    The government has asked for the National Assembly’s co-operation in passing the revision during the upcoming plenary session because, otherwise, the revision will have to wait until the next plenary session in December, which, the government said, would be ‘too late’.

    Currently, a pack of Heets, the consumable item of the IQOS system, is sold at 4,300 won ($3.78) per pack, which includes 1,739.6 won in tax. A pack of traditional tobacco cigarettes meanwhile, sells for 4,500 won, which includes 3,323.4 won in tax.

    Two of the lawmakers who proposed the revision believe that the tax on HNB products should be the same as that on traditional cigarettes, while the other proposer believes the former should be less than the latter.

    Members of the strategy and finance committee are said to be trying to find middle ground.

    The story quoted an unspecified ‘official’ as saying that the tax rate was only a matter of how much.

    “Some said in other countries that the HNB e-cigarette is less harmful than general cigarette products so less tax should be imposed,” the official was quoted as saying. “But it’s not a decisive factor.

    “The National Assembly will eventually pass the revision.”

  • Bans seep into homes

    Bans seep into homes

    Smokers living in South Korea in apartments and other residences with shared amenities will face a crackdown from early next year after the parliament approved a tough anti-smoking bill aimed at fighting second-hand smoke, according to a story in The Korea Times.

    Choi Myung-gil of the opposition People’s Party of Korea won approval for his bill yesterday.

    It is due to take effect from January.

    Under existing laws, smoking is banned in the stairways, corridors and elevators of residences with shared amenities.

    But smoking at home is not regulated, and some believe that this leaves people vulnerable to tobacco smoke coming from other apartments.

    When the new law goes into effect, wardens, on request, will be authorized to visit a home where people are thought to be smoking.

    They won’t be given the right to force people to stop smoking, but they will be able to warn them.

  • HNB market set to glow

    HNB market set to glow

    British American Tobacco is to roll out its heat-not-burn tobacco device on South Korea’s market, where demand for such devices is increasing, according to a story in The Korea Herald.

    BAT Korea is due to hold a press conference on Thursday to promote Glo and announce when the device will go on sale, company officials were quoted as saying on Sunday.

    The company is hoping to boost sales, in part by satisfying what is unfulfilled demand.

    The Times reported that Philip Morris International launched IQOS in early June but has not been able to keep up with demand.

    BAT Korea has recently completed the construction of new facilities in Sacheon, South Gyeongsang Province, where it produces the consumable element of the device, Neosticks. These are currently being exported to Japan but will soon be made available in Korea as well, officials said.

    Meanwhile, KT&G is due to roll out its own heat-not-burn device.

  • Tax spending diverted

    Tax spending diverted

    South Korea’s cigarette-tax revenue is this year forecast to reach three trillion won (US$2.8 billion) for the first time, according to a story in The Korea Herald citing government figures.

    Revenue rose significantly from January 2015 when a tax increase helped pushed the price of cigarettes up by 80 percent from 2,500 won per pack to 4,500 won.

    According to figures issued by the Ministry of Health and Welfare, revenues from taxes levied on tobacco products increased from 2.4 trillion won in 2015 to 2.9 trillion won in 2016.

    And the ministry forecasts that the government could collect 3.06 trillion won this year.

    The money the state collects from tobacco-product taxes should, in principle, be used to operate a national health promotion fund that covers the annual health care costs associated with smoking and ‘related diseases’.

    However, complaints have been made because the extra tax revenue has been used for other purposes.

    Last year, one billion won collected as part of the tobacco tax was allocated to other areas, such as building infrastructure related to telemedicine.