Korea - South: Smokers Stockpiling Cigarettes

Source from:  Korea Times (kr)  03/10/2013

Sales of cigarettes jumped more than 10 percent at some discount chains and convenience stores last week, an indication that some smokers are moving to stockpile them in anticipation of price hikes, industry officials said.

According to Lotte Mart, one of the nation's largest retailers, sales of cigarettes rose 16 percent for three days from March 6 to 8 from a year earlier, compared with a 15 percent drop from March 1 to 5. GS25, a major convenience store chain, said its cigarette sales also increased about 12 percent.

The sharp gains in cigarette sales followed reports the government plans to raise taxes on cigarettes as a means to reduce the country's high smoking rate and raise funds to finance welfare programs.

Health and Welfare Minister nominee Chin Young cited low cigarette prices as one of the key reasons behind the nation's high smoking rate during parliamentary hearings on March 6.

"The smoking rate of Korean males is at the highest level among the Organization for Economic Cooperation Development (OECD) countries, but the prices of cigarettes are the lowest," Chin said at the hearing.

According to a 2009 study conducted by the European Union, Korea's smoking rate was the second-highest among OECD members. The survey showed that 44.3 percent of all males aged 15 and older in Korea smoke, trailing only behind Greece with 46.3 percent.

Chin, one of the key aides of President Park Geun-hye, said low cigarette prices are also a key reason for the high smoking rate among teenagers, hinting the new government will consider raising cigarettes prices by increasing tobacco consumption taxes. Government revenue from tobacco taxes is about 7 trillion won ($6.42 billion) per year.

The ruling Saenuri Party is also moving to raise cigarette prices. Rep. Kim Jae-won of Saenuri submitted a revision bill last week calling for retail cigarette price hikes of 2,000 won to 4,500 won per pack by increasing the tobacco consumption tax and health improvement fees.

The two-term lawmaker pledged to pass the bill this year, saying lawmakers had already reached a bipartisan consensus. Kim said cigarette prices have remained the same for the past eight years since they were last raised in 2004 and the revision bill was timely.

However, the government and ruling party's moves to raise tobacco prices are drawing protest from smokers and small tobacco retailers.

Retailers are opposing the government's plan as it will dampen sales of tobacco products.

"Raising cigarette prices by as much as 2,000 won is too much. In a survey, 70 percent of our members said a hike of 500 won would be appropriate," the Korea Tobacco Retailer Association said Saturday in a statement.

The association, a lobby group for cigarette retailers across the nation, said if the government presses ahead with a price hike of 2,000 won, it should grant subsidies to small tobacco retailers to protect them from the possible fall in sales from the price hikes.

It said that more than 76 percent of cigarette retailers are small business owners whose shops are smaller than 66 square meters.

Smokers also opposed the planned increase, saying working-class households will be the first who suffer if the revision bill to raise tobacco taxes is approved in the National Assembly.

"I urge the government to find additional tax sources other than raising tobacco taxes," said Kim Nam-su, an office worker.

Recent research released by the Korea Centers for Disease Control and Prevention found that raising the price of cigarette is most effective in lowering cigarette consumption. According to data from the agency, cigarette consumption tends to decrease 7.3 percent toa every 500 won of price increase. Enditem