Sin taxes collected by govt. up sharply fueled by dues slapped on tobacco: data

The amount of sin taxes levied on tobacco, liquor and gambling has risen dramatically in recent years due mainly to the sharp rise in dues levied on cigarettes, government data showed Wednesday.

The government increased taxes on cigarettes by 2,000 won ($1.70) per pack from Jan. 1, 2015, raising the price to 4,500 won, and compelled tobacco companies to place graphic images showing the harmful effects of smoking on the upper part of cigarette packs in 2016 as part of efforts to discourage smoking.

The total brought in by sin taxes surged to 18.5 trillion won ($16.3 billion) last year from 15.9 trillion won in 2015, according to the figures provided by the National Tax Service and other government agencies. Sin tax revenue was 11.2 trillion won in 2012, 11.3 trillion won in 2013 and 11.9 trillion won in 2014.

Taxes on cigarettes more than doubled to 12.3 trillion won last year compared to 5.9 trillion won in 2012. The taxes on tobacco accounted for 66.5 percent of all sin taxes, including dues on alcohol and gambling. Liquor tax came in second at 4.4 trillion won, followed by the taxes on gambling at 174.2 billion won.

The total taxes on gambling breaks down to 139.9 billion won from casinos, 27.4 billion won from horse racing and 6.9 billion won from boat racing.

The government also collected 1.5 trillion won in revenues from lottery sales.

The sin tax amount is likely to climb further in the coming years as the government is set to raise taxes on electronic cigarettes next month.

The National Assembly Strategy and Finance Committee passed a bill earlier this month to raise the special excise tax on heat-not-burn (HNB) cigarettes, such as Phillip Morris' iQOS and British American Tobacco's Glo, to about 90 percent of the tax levied on conventional cigarettes from the current 50 percent.

The bill is expected to pass through the plenary session of the assembly next month.

Currently, Phillip Morris' iQOS is sold at 4,300 won ($3.8) per pack, including 1,739.6 won tax, in Korea. Ordinary cigarettes are sold at 4,500 won for a pack, which includes 3,323.4 won in taxes.

The rationale is that the smoke-free tobacco also emits harmful substances.

Rep. Kim Gwang-lim of the major opposition Liberty Korea Party said HNB cigarettes should be categorized as conventional cigarettes as they use the same tobacco and emit vapor, which is similar to the harmful smoke released by traditional cigarettes. (Yonhap)