Korea Hikes Cigarette Taxes, Smokers Quit

December 29, 2015 Taxation in South Korea

SEOUL – Smokers in Korea appear to be smoking less cigarettes, and some may have even quit, as the government has more than doubled the taxes on the sale of cigarettes.

Earlier this week the Korean non-government organization Korea Taxpayers’ Association (KTA) released new information showing that the country’s recent hike to cigarette taxes had very positive results.

In January this year the tax applicable to the sale of cigarettes was raised from KRW 1 500 per pack of cigarettes to KRW 3 318, raising the price of an average pack of cigarettes fro, KRW 2 500 to KRW 4 500.

As a result of the tax hike, the total tax revenues collected from the sale of cigarettes rose by approximately KRW 4.3 trillion, an increase of 63.9 percent compared to the previous year.
However, despite the rise in tax collections, the total amount of cigarettes sold fell by 23.4 percent, totalling 3.33 billion packs.

No official information has yet been released on whether the tax hikes have had an effect on smoking rates, but initial information gathered by the KTA indicated that the national smoking rate among adult males has dropped by 5.8 percent compared to a total rate of 40.8 percent in 2014.

Photo By: Matt Trostle