According to the finance ministry, police and officials from the tax and customs offices plan to check the inventory and sales records of all manufacturers to make certain they are not fabricating documents to claim they shipped out products this year when they are actually withholding them in storage.
Companies that report they shipped products this year will pay less taxes compared to next year. These products could then be sold in the new year with the tobacco companies pocketing more money thanks to higher retail prices for a pack of cigarettes.
Seoul announced earlier this year that the average price for a pack of cigarettes would go up 2,000 won (US$1.8). The price hike is due to the addition of a special excise tax and other indirect taxes on cigarettes.
Policymakers have claimed the rise in prices will force many people to quit smoking altogether, although detractors have argued it may not have the desired effect and only put an extra burden on consumers.
“Efforts will be made to check the actual inventory of such companies as KT&G Corp., Philip Morris, British American Tobacco and Japan Tobacco International,” a finance ministry official said.
In addition, the government plans to keep tabs on cigarettes sold through the Internet.
Official sources said there have been moves by some people to hoard cigarettes so they can be sold next year for a profit when retail prices go up.
Some 200 dedicated inspectors may be assigned to investigating hoarding and sales in the new year.
On the other hand, authorities said most retailers have not stockpiled cigarettes mainly because there has not been enough supply.