South Korean Government Drops Plan to Raise Taxes on Heated Tobacco Products
According to The Korea Herald, the South Korean government dropped its plan to raise taxes on heated tobacco products just two days after the finance minister proposed the measure. South Korea currently taxes conventional cigarettes more heavily than heat
According to the Korea Herald, the South Korean government abandoned its plan to raise taxes on heated tobacco products just two days after the finance minister proposed the measure.
Currently, South Korea imposes higher taxes on regular cigarettes than on heated tobacco products, as it considers the former to be more harmful to health.
A tax of 3,323 won (2.52 USD) is levied on each pack of combustible cigarettes, which includes 1,007 won in tobacco consumption tax, 443 won in education tax, 594 won in consumption tax, 409 won in value-added tax, 841 won in health promotion fee, 24 won in waste charge, and 5 won to support farmers growing tobacco leaves.
In contrast, heated tobacco products are taxed at 3,004 won, which is 90.4% of the tax on regular tobacco products.
On April 17, Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho stated that heated tobacco products “should be treated the same as regular cigarettes.”
His remarks immediately drew strong public opposition, prompting the government to retract the proposal. The Ministry of Finance stated in a release on April 19 that the government “is not currently considering raising tobacco taxes.”
In recent years, South Korea's tobacco product revenue has shrunk due to declining sales of combustible cigarettes. In 2022, the government collected 11.8 trillion won in taxes on all tobacco products, down from 12 trillion won in 2020. Although sales of heated tobacco products have increased during the same period, their relatively low sales volume and lower tax rates mean they have not offset the tax revenue losses caused by the decline in cigarette sales.
