South Korea’s inconsistent smoking laws will hit a new phase in January when cigarette prices will nearly double. Experts claim the price hike alone will not be enough to reduce the country’s alarmingly high smoking rate, yet smokers themselves argue they are being unfairly targeted by the government. On both sides, nobody is satisfied with the outcome.
In the first price increase in a decade, the price of a pack of 20 cigarettes will nearly double to 4,500 won ($4.50) from January. The hike is part of the government plan to reduce the number of smokers by 15 percent in the next five years. The country currently has the cheapest cigarette prices in the OECD and the second highest percentage of smokers behind Greece, leading to South Korea being described as a ‘paradise’ for smoking. A poll suggests one in three could be persuaded to quit by the price increase.
However experts are not convinced. Originally the Ministry of Health and Welfare reported a price increase to about 8,000 won ($8) per pack would be most effective in preventing smoking. Others say that simply raising the cost of smoking will not be enough, and other strategies are needed.
“With the current non-price policies lacking, the effectiveness of the price policy will not be seen,” says Park Yong-deok from Seoul Patients’ Rights. “For policy consistency, the government needs to improve and put efforts into non-price policies, and follow WHO recommendations.”
The WHO asserts increasing taxes on cigarettes is the most effective way to reduce the number of smokers, but it encourages price rises as part of its six point framework known as ‘MPOWER.’ It endorses support for smokers to quit, increased education on the health impacts of smoking and bans on all forms of tobacco advertising.
The consistency of non-price policy in Korea has been called into question. Seoul has made great efforts in increasing the number of smoke free parks and outdoor areas and has also designated workplaces as smoke free, yet the government has exempted indoor areas such as cafes and restaurants with smoking booths and billiard halls from the regulations. The WTO recommends that lighting up should be banned in all public indoor areas.
The country currently does not restrict advertising in print media or in stores, and companies have taken advantage with aggressive campaigns that have targeted specific groups such as women. There is also little help for those that wish to stop smoking like the free services offered in the US, Canada and the UK. The government has introduced laws that require schools to provide two anti-smoking campaigns to its students annually, but evidence shows teachers and students are not taking them seriously. Funding for the prevention of teenagers smoking is 0.1 percent of the national health promotion fund.
Campaigners believe that this shows the government is not serious about stopping smoking and the price increase is all about raising money.
“Currently the lack of tax revenues is quite serious. The government announced a shortfall of 8.05 trillion won ($7.5 billion) officially,” says Shin Won-gee from People’s Solidarity for Participatory Democracy. “The individual consumption taxes in tobacco might be designed just to increase tax revenues. This is not for citizens’ health.”
Shin also believes the increase places a higher tax burden on those from lower-income groups and will be the first in a series of tax increases that disproportionately affect them. “I believe tobacco is the first target for increasing tax revenue. There are other options like alcohol. It’s possible that the government will try to increase other taxes, adopting the same logic,” he said.
Smokers point to the breakdown of the tax paid when you buy a pack of cigarettes in Korea as evidence they are being unfairly targeted. Nearly half of the taxes go to medical insurance and to education tax, leading smoker’s groups to argue they are paying more than their fair share into public funds.
According to Park from Seoul Patients’ Rights the evidence shows that 1.04 trillion won ($940 million) a year is spent on treating smoke related illnesses, including heart diseases and hypertension caused by smoking.
“The problem is that tobacco tax is used to manage the finance and deficit of national health insurance,” he says. “1.09 trillion won ($950 million) is going to national health insurance from cigarette tax. For smokers, this is unfair, because some of tobacco taxes revenues directly go to national health insurance. Also, smokers have to pay individual medical expense to quit smoking without any help of medical insurance.”
The fiscal costs of smoking to a country remain unclear. Reports have found that smokers now actually make money for the treasury in some countries through high tax revenues, while other studies have said that it is virtually impossible to work out if smokers are a fiscal gain or drain on a nation.
However, the World Bank argues that disproportionately high smoking tax is more than justified and “policymakers’ main concern should be over the distributional impact of the entire tax and expenditure system, and less on particular taxes in isolation.” Their study showed that poor consumers actually benefit more from a tax increase because it is more likely to force them to quit “and their relative financial burden may be correspondingly reduced.”
Additionally social benefits of strong antismoking regulation are clear and the scientific community is in agreement on the improvement in public health caused by a reduced percentage of smokers. In a study done on the effect of smoking bans and higher taxes, researchers found a 10 percent reduction in premature births and severe childhood asthma attacks within a year of smoke-free laws being introduced. The WHO has also released data in the form of an eye-catching video showing higher cigarette prices lead to lower consumption and eventually better public health.
Using tax incentives to encourage people to live more healthy lifestyles are becoming a widespread government tool. Apart from smoking, regulations are also being introduced to curb obesity. The Mexican government now levies a tax on food and drinks considered high in fat, sugar and salt. The success of the regulation in slowing fast food sales and raising awareness could encourage other governments to follow suit and make junk food the next target of tax hikes in the name of public health.