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Tobacco sales drop lower than anticipated after price hike

All News 10:06 June 21, 2017

SEOUL, June 21 (Yonhap) -- Cigarette sales in South Korea have fallen lower than anticipated over the past two years despite a price jump, but tobacco tax revenue has far outstripped government forecasts, a civic group said Wednesday.

Starting in January 2015, South Korea jacked up the price of cigarettes by 80 percent, from 2,500 won (US$2.19) per pack to 4,500 won, in an effort to curb smoking.

At that time, the finance ministry expected the country's cigarette sales to tumble roughly 34 percent from 4.36 billion packs in 2014 to around 2.87 billion packs in 2015 and 2016, respectively.

But South Korean smokers purchased 3.33 billion packs in 2015 and 3.66 packs last year, dropping 23.4 percent and 15.9 percent from 2014, respectively, according to the Korea Taxpayers Association.

In contrast, the country's tax revenue from tobacco sales climbed by a much larger amount than the government had expected.

The ministry had forecast the tax revenue to increase 2.78 trillion won ($2.44 billion) in 2015 and 2016 each from 2014, but the actual gains came to 3.53 trillion won and 5.39 trillion won, respectively.

Tobacco sales drop lower than anticipated after price hike - 1

The association predicted the current trend to last for the time being.

In light of some 1.1 billion packs sold in the first four months of the year, cigarette sales are expected to reach 3.52 billion packs for all of 2017. The tobacco tax revenue is forecast to increase 4.5 trillion won from 2014 to 11.5 trillion won this year.

Kim Sun-taek, head of the association, slammed government policy, claiming high tobacco taxes have imposed a big burden on the underprivileged. Various taxes account for more than 60 percent of the tobacco price in South Korea.

As part of its renewed push to rein in smoking, the government required cigarette makers to place graphic images of the damage done to internal organs by smoking on the upper part of cigarette packets starting December last year.

According to government data, the smoking rate among South Koreans aged 19 or older came to 39.3 percent in 2015, compared to 43.1 percent the previous year. The government aims to cut the rate to 29 percent by 2020.

Smokers puff away in a smoking booth in central Seoul on June 20, 2017. (Yonhap)


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