April 27, 2024

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[THE INVESTOR] Cigarette sales in 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 on June 21.

Starting in January 2015, 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 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 (US$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. The association predicted the current trend to last for the time being.

By Alex Lee and newswires (alexlee@heraldcorp.com)