SEOUL, Sep. 16 (Korea Bizwire) – Along with the Korean government’s recent announcement to raise the cigarette price by 2,000 won, or about US$2, from January next year, it also said on September 14 that a plan to hike a tobacco product price would be implemented in line with the rise of consumer prices in the future.
It is outlined that there would be a 5 percent hike in cigarette prices every time consumer prices increase. It means that the prices of tobacco products are expected to rise 200 to 300 won every two to three years, provided that the percentage of annual consumer price inflation amounts to 2 to 3 percent.
Provided that the percentage of a price hike represents 3 percent on average, according to a report conducted by the Korea Institute of Public Finance, the price of a pack of cigarettes would be 6,048 won by 2025.
Moreover, the Ministry of Health and Welfare announced on September 12 that there would be a tax hike on alternative tobacco products such as electronic cigarettes and pipe tobaccos aside from the hike on cigarette prices. The tax for public health on the cigarette substitutes is planned to go up to 525 won from 251 won on electronic cigarettes and to 30.2 won from 12.7 won on pipe tobaccos.
The broad-based price hike on cigarette products seems to be attributed to the government’s intention to boost tax revenues with less resistance than raising direct taxes.
By Veronica Huh (email@example.com)