Korea - South: Gov''t Considering Raising Tobacco Prices

Source from:  Maeil Business Newspaper & mk.co.kr (kr)  01/15/2013

The South Korean government is likely to raise tobacco prices within this year since a 1,000 won ($0.95) price hike would raise consumer prices by a mere 0.2 percentage points according to an internal analysis by the Ministry of Strategy and Finance (MOSF). Raising tobacco prices are deemed to be the most effective means of encouraging quitting smoking, as voiced on the campaign ad ran by Maeil Business Newspaper and at the Conference of the Parties (COP) to the WHO Framework Convention on Tobacco Control (FCTC) hosted by Korea.

The government is examining increasing cigarette prices by 500 won to 1,000 won within this year, said the MOSF and Ministry of Health and Welfare (MOHW) Monday. But "a steep price hike is argued by some to be more effective for promoting non-smoking and securing tax revenues for a long term," said an official of the MOSF, suggesting a possibility of raising prices by 1,000 won. A price hike by 500 won would generate additional tax revenue of 2.67 trillion won, and a hike by 1,000 won would generate that of 4.46 trillion won, estimated the government. Raising tobacco prices proved positive for public health, as evidenced by the previous case: the tobacco price hike by 500 won in 2004 boosted the share of non-smokers out of all Koreans by nearly 10 percent. A 500 won rise in tobacco prices adds 0.1 percentage point to inflation and a 1,000 won rise adds 0.2 percentage points, according to the analysis. Enditem