S Korea's tobacco tax hike: Cigarettes nearly double in price

SEOUL - January's tobacco tax increase in South Korea, the first in a decade, has pushed up the price of Marlboro cigarettes by a record 2,000 won (S$2.47) to 4,500 won, higher than major Japanese brand Mevius, which cost 430 yen (S$4.90) in Japan. The significant price rise will severely hurt the pockets of many South Korean smokers.

An official from a South Korean union for tobacco consumers said the increase will see each smoker spend an extra 700,000 won a year. The group is critical of the raise, saying it is almost equivalent to the annual earned income tax paid by a worker on 45 million won per year.

Deputy Prime Minister and Minister of Strategy and Finance Choi Kyung-hwan said the main purpose of raising the tax was to benefit the nation's health, not to increase tax revenue. According to the South Korean government, 43.7 per cent of adults smoke, the highest among Organisation for Economic Cooperation and Development countries. Before the hike, the average price of a packet of cigarettes was 2,500 won, the lowest in the OECD.

According to Yonhap News Agency, when the cigarette tax was raised by 500 won in 2004, sales fell by about 26 per cent in volume. It is estimated that this hike will cut sales by about 20 per cent.

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