The nation’s ruling and opposition parties tentatively agreed to raise the tax on cigarettes by 2,000 won ($1.80) per pack next year during their review of the 2015 budget.
Under the agreement between the Saenuri Party and the New Politics Alliance for Democracy, the cigarette prices are likely to range between 4,300 won and 5,000 won, depending on the product.
The government announced in September that it would push to raise tobacco prices by 80 percent by January as part of its measures to decrease the country’s high smoking rate among adult males to 29 percent by 2020.
The Health and Welfare Ministry has said that it would seek to raise tobacco prices by 2,000 won per pack and would also try to introduce a pricing system where cigarette prices will rise in line with inflation.
Two years ago, the Finance Ministry said that it was skeptical about the cigarette price hike pushed by the Health and Welfare Ministry. It cited possible negative effects on consumer prices and household consumption.
Further, the Finance Ministry had denied rumors in early 2013 that policymakers were poised to raise cigarette prices or create a new tax on the products.
But since 2013, senior financial policymakers have told the National Assembly that “it is necessary to consider raising prices as the last hike in tobacco prices was in December 2004.”
By Kim Yon-se (kys@heraldcorp.com)
