This blog post examines the tobacco tax increase from various angles to determine whether it is a measure to promote public health or a means of increasing the tax burden on the common people.
Since 2015, the Korean government has significantly increased the price of cigarettes as part of the government’s anti-smoking policy to promote public health. With the price of cigarettes rising by 2,000 won, most cigarettes now cost more than 4,000 won, which became a major issue in South Korea, where more than one-third of adult men smoke. The Korean government’s opinion is that the purchase rate of cigarettes will naturally decrease when the price of cigarettes increases, and as a result, the smoking rate of the people will decrease, thereby promoting the health of the people. However, the opinion of smokers that such a large increase in the price of cigarettes will only increase the burden on the common people is in conflict. I oppose the plan to raise the price of cigarettes for the following reasons.
First of all, as mentioned above, the increase in the price of cigarettes will increase the economic burden on the common people. According to the results of a survey by the Korea Centers for Disease Control and Prevention published in 2014, when adult men were classified into four groups according to their income level: low, middle-low, middle, and middle-high, the difference in smoking rates was 10% between the upper and lower income groups, and the lower the income, the higher the smoking rate. As the results of this survey show, the consumption of cigarettes is prominent among the lower classes, which means that the tobacco tax hike will most likely be felt by the lower classes. The 2,000 won per pack increase will be a significant burden for the lower classes who regularly consume cigarettes, but the wealthy will not experience much inconvenience. This is a clear violation of the principle of tax equity, which is clearly stated in Article 18 of the Tax Basic Act, that is, that taxes should be collected fairly according to income levels. We often see office workers or laborers blowing away their fatigue and stress of the day with a single cigarette. For them, cigarettes are a cheap way to forget about a hard day and gain the strength to live tomorrow. As such, cigarettes are a luxury item that is closely connected to the lives of ordinary people. If the Korean government had taken these characteristics of cigarettes into a little more consideration, it would not have taken such a steep approach to raising the price of cigarettes.
Next, it is questionable whether the real purpose of raising the price of cigarettes is to “promote the health of the people,” as the Korean government has announced. Considering that the effect of the 500 won increase in the cigarette price in 2004 only lasted for five months, the effectiveness of the cigarette price increase plan itself is questionable, and there are many other ways to encourage smokers to quit smoking in order to reduce the smoking rate. A typical method is the “insertion of warning pictures on cigarette packs,” which is currently being implemented in several countries. This method is a representative “non-price policy” that can reduce smoking rates without much effort, and as the examples of other countries show, it is a proven method. In Canada, which actually implemented a policy of inserting warning images, the smoking rate dropped by 6% in the six years after the introduction of the system, and in Brazil, it dropped by 8.6 points in just one year. This bill was repeatedly proposed in the National Assembly for the past 13 years, but it was only partially passed this year with the proviso that “the warning image should not be too offensive.” If the warning pictures that inform people of the harm caused by smoking are not disgusting enough to reduce the smoking rate, then why are they even inserted in the first place? Given the Korean government’s lack of enthusiasm in introducing non-price-based elements that can reduce the smoking rate, it is easy to suspect that the real goal of raising the cigarette tax is to improve the health of the Korean people. According to a survey conducted by Yang Seung-jo, a member of the National Assembly’s Health and Welfare Committee, 33.0% of respondents said that the tobacco tax increase was a smoking ban policy for the sake of public health, while 61.1% said that it was a tax increase on the poor to cover the shortfall in tax revenue, which is about twice as many. In particular, 77. Three percent said that the tobacco price increase was for tax increases. Looking at the Korean government’s attitude of simply raising the tobacco price without implementing other effective anti-smoking policies and the public’s response to it, it seems that the tobacco price increase policy is simply a ploy to make up for the insufficient tax revenue.
Some may argue that the burden on the common people is natural in order to expect a reduction in smoking rates due to the increase in the price of cigarettes. If the process is not painful, how can a smoker quit? However, we must take into account that cigarettes are representative “inelastic” consumer goods. Inelastic means that existing consumers are very loyal to the goods and are not much affected by changes in price. Representative inelastic goods include cigarettes, alcohol, and daily necessities. The situation varies from country to country, so it cannot be applied as is in the case of Korea, but in Japan, where the cigarette price was raised to about 1,500 won around 2010, the smoking rate rose slightly, and as mentioned briefly above, when the cigarette price was raised by 500 won around 2004, the effect of reducing the smoking rate only lasted about five months. Considering these examples, it is doubtful whether a policy to raise the price of cigarettes will have a meaningful effect on reducing smoking rates. In addition, since equality in taxation must be maintained in any case, there is no room for argument that raising the price of cigarettes will increase the burden on the common people. In addition, the right to smoke is also a clear right of the people, and if the government forces smokers to quit smoking rather than encouraging them to quit voluntarily, this can be seen as an infringement of the smokers’ right to smoke.
In addition, as the price of cigarettes has increased, the National Health Promotion Fund, which is used for the health of smokers, has also increased, so more investment can be made in the health of smokers, so there may be claims that the government is actually making efforts to improve the health of the people and that there is nothing wrong with that. However, when looking at the increase in the amount of the National Health Promotion Fund from 354 won to 841 won, which is about 500 won based on a pack of cigarettes (2,500 won), it is difficult to avoid the argument that it is a clear tax increase when considering that the increase in the cigarette consumption tax, local education tax, value-added tax, and newly introduced individual consumption tax amounts to about 1,300 won. Also, although it is a bit off topic, the Korean government increased the budget for the National Health Promotion Fund in anticipation of an increase in tax revenue due to the tobacco tax hike, but the budget failed to meet expectations. The government had planned to spend 316.3 billion won, but the actual performance was only 117.4 billion won. If the aim was really to increase the National Health Promotion Fund to consider the welfare of smokers, it has failed.
Of course, smoking is a major problem for both individuals and the country. The government invests a lot of money every year in smoking prevention and disease management caused by smoking, and diseases caused by smoking are causing a lot of suffering. However, the Korean government’s policy of raising the price of cigarettes to encourage people to quit smoking seems to have various problems. As mentioned above, it will increase the financial burden on the common people, and its intention is also questionable. I criticize the Korean government for this attitude of not considering the common people and this act of trying to secure tax revenue in a cunning way. In addition, since it is a policy that encourages people to quit smoking by forcibly stopping them from smoking rather than voluntarily participating in quitting smoking to reduce the smoking rate, various side effects are expected. The Korean government should consider more carefully and thoroughly before implementing a policy that is more effective and reduces the burden on the people, rather than raising the price of cigarettes. If this happens, the nation will be able to promote the health and well-being of its people, and the people will be able to escape the clutches of cigarettes more easily.
