Price Of IQOS HEETS May Go Up

Source from:  Biz & Tech 07/26/2017

The price of Phillip Morris's IQOS HEETS may rise here, following the government's decision to impose a higher tax on heat-not-burn (HNB) cigarettes.

This move will also weigh on British American Tobacco (BAT), given the firm also plans to launch its HNB glo cigarettes Aug. 10.

According to industry officials, Friday, the government and the National Assembly have agreed to raise the tax rate levied on HNB cigarettes to the level imposed on ordinary ones.

"We will wait until the government comes up with a specific measure," a Philip Morris International Korea official said. "But a price hike is unavoidable, if the government really levies a higher tax."

Categorizing HNB tobaccos as e-cigarettes, the government has imposed 1,588 won ($1.42) tax on each pack of heated tobacco sticks so far, half the tax on each pack of combustible cigarettes.

The tax is divided into excise, health promotion fund and individual consumption taxes.

Amid growing concern on a loophole in the tax system, Rep. Kim Gwang-lim of the major opposition Liberty Korea Party proposed a revised bill last month to levy the new products with the same tax rate as ordinary cigarettes.

"HNB cigarettes should be categorized as conventional cigarettes as they use the same tobacco and emit smoke, which is similar to the harmful smoke released by traditional cigarettes," the lawmaker said.

The Ministry of Health and Welfare, which has carried out aggressive anti-smoking campaigns, also supports the tax hike. The ministry has concerned that IQOS may increase the nation's smoking rate.

Smokers and Philip Morris, on the other hand, oppose the measure.

"The government is seemingly trying to collect more taxes, taking advantage of HNB cigarettes' popularity," a smokers' community I Love Smoking said. "Low-income people will fall victims to the tax hike."

Philip Morris has claimed that the smoke generated by IQOS contains 90 percent less than the harmful substances in smoke generated by conventional burning cigarettes.

The Ministry of Food and Drug Safety will begin to measure nicotine and tar levels in the product next month to verify the company's claims. The two chemicals are the most dangerous substances in cigarettes. Enditem