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Cigarette Price Hike Leads to Less Smoking, More Tax Income

Written: 2016-01-08 12:50:55Updated: 2016-01-08 15:38:12

Cigarette Price Hike Leads to Less Smoking, More Tax Income

Anchor: Last year's tax revenue from cigarette sales grew 51 percent from the previous year, backed by the cigarette price hike. However, less number of smokers kicked the habit than the government initially expected.
Park Jong-hong has more.

Report: The tax revenue from cigarette sales in 2015 increased to ten-point-five trillion won, up some three-point-six trillion won from that of 2014.

The Ministry of Strategy and Finance on Friday released the figure, which is eleven percent more than the government's initial estimate of two-point-eight trillion won.

In stark contrast, the ministry said the sales volume of cigarettes went down by nearly 24 percent year-on-year. 

The combined distribution of domestic and imported cigarettes went down by 29-point-six percent. 

Even though the price hike did result in discouraging smokers to kick the habit, it fell short of the government projection of a 34-percent sales decline.

The government attributes this lackluster decline to the delay in introducing warning pictures on cigarette labels. 

In response, the Korea Tax Internet slammed the government for having been overly ambitious about deterring smokers with the cigarette price hikes.
 
[Sound bite: Kim Sun-taek – Chairman of Korea Tax Internet (Jan. 8 / Korean)]
"It’s easier to pass the price hike bill if the projected decline in cigarette sales is more apparent. To this end, the government is seen to have intentionally exaggerated the desired effect.”

Considering the hoarding of cigarettes in late 2014 before the price hike went into effect, critics claim the sales volume last year has been underestimated and that the no-smoking effect is blown out of proportion.

With the cigarette consumption slowly rising, there are growing calls for the government to allocate more money from the tax revenue into anti-smoking programs.
Park Jong-hong, KBS World Radio News.

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