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Lawmakers raise e-cigarette taxes

Nov 10,2017
Tobacco sticks for heat-not-burn cigarettes are about to get more expensive after lawmakers passed a bill on Thursday to raise taxes on them.

The National Assembly decided to increase the individual consumption tax on sticks for so-called heat-not-burn cigarettes sold in Korea. They include Philip Morris’ IQOS, British America Tobacco’s glo and KT&G’s lil. These devices electronically heat up sticks of tobacco to a point at which nicotine can still be extracted without burning them like conventional cigarettes.

Currently, the tax on a pack of 20 tobacco sticks is 126 won ($0.11), compared to 594 won for conventional cigarettes. Under the revised law, the individual consumption tax for sticks will rise to 529 won.

When combined with other taxes like the cigarette consumption tax, regional education tax and value-added tax, the total taxes on sticks currently add up to 1,739 won. That number is expected to rise to 2,990 won.

By comparison, taxes on conventional cigarettes total 3,323 won.

The effect on the retail price is expected to be a 700 won increase on a 20-stick pack, from 4,300 won to 5,000 won.

The bill passed the floor with overwhelming support. Among 239 lawmakers that voted, 230 were in favor, one opposed and eight abstained.

In anticipation of bulk tobacco stick purchases after the announcement, the government vowed to impose strict penalties on people who resell the sticks for a profit.

The Ministry of Strategy and Finance is restricting the amount of tobacco sticks that manufacturers can supply to the market, capping it at 110 percent of the average supply sold in the past three months.

Any retailers who commit profiteering could face up to two years in prison or a 50 million won fine, the ministry said.

E-cigarettes have been gaining popularity since Philip Morris introduced the IQOS to the Korean market in June.

British American followed in August with glo, and the Korean tobacco company KT&G released its own heat-not-burn device last week.


BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]