About eight months have passed since the government raised the tobacco tax, which increased the average prices of cigarettes by 80 percent, from 2,500 won ($2.10) to 4,500 won a pack.
So it might be a good time to look into what impact the drastic price hike is having on smokers, the industry and government policies.
The first question, of course, should be about how effective the price control is in reducing cigarette sales and lowering the smoking rate.
Common sense says that the more expensive the tobacco products are, the less people are lured to and hold on to the smoking habit. In fact, the World Health Organization says that raising taxes on tobacco is the most effective policy to reduce its use.
Likewise, Korean government officials had predicted in January that the tax hike would cut tobacco sales by 34 percent and lower the smoking rate, which is one of the highest among advanced economies, at 42.5 percent for men, to 35 percent by 2016.
What we see is astonishingly far from the prediction. Official data shows that tobacco sales more than halved to 170 million packs in January. The hefty price hike and the tendency of people to include quitting smoking in their New Year’s resolutions combined to curb tobacco consumption in the month.
But the figures have been steadily bouncing back, with sales increasing from 240 million packs in March to 270 million in May and 350 million in July. The latest figure is close to the 362 million monthly average recorded in the past three years.
In other words, much of the impact from the price hike is gone, which raises worries that the price policy is not as effective in Korea as in other countries.
It is ironic that in drawing up next year’s state budget, the government, which had insisted that it was raising the tobacco tax more to lower the smoking rate than increase the tax revenue, expects tobacco sales to reach 3.46 billion packs next year, up 600 million or 21 percent from this year.
This clearly shows that the government is in self-contradiction and that there should be more public pressure on its antismoking policies, especially those on nonprice-related programs.
The government is retreating in this endeavor as well. Officials said this year’s tobacco tax revenue is estimated to amount to 10 trillion won, up 3 trillion won from last year. Based on this projection, the government raised the budget for antismoking programs to 147.5 billion won this year, compared with 11.3 billion last year.
Now officials are saying that next year’s spending plan has been cut by 16 billion won or 10.9 percent from this year. They are getting more revenue from tobacco sales and shrinking the budget for fighting smoking.
What’s more worrisome is that the budget cut will affect core parts of antismoking efforts -- like education programs for primary and secondary school students and enlisted soldiers and policemen. Also facing downsizing are programs for treating addicted smokers and publicity campaigns.
Officials should be reminded that the first step to curb tobacco consumption is to make sure a greater portion of the increased revenue from cigarette sales should go to relevant antismoking programs.
