Earlier this month, data released by the government of Korea indicated that imports of e-cigarettes has more than doubled, since taxes on combustible tobacco were increased. Back in 2015, the prices on cigarettes were increased by 2,000 won, to 4,500 won per pack, which equates to an increase of $1.70 per pack.
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Subsequently, the government of Korea said that imports of e-liquids have increased from 12 tons in 2015 and 22 tons in 2016, to an astounding 61 tons in the first eight months of 2017. Additionally, imports of other vaping products have increased from 173 tons between 2012 and 2014, to 269 tons, between 2015 and August of this year.
Industry experts are in agreement that this sharp increase in imports can be attributed to the fact that smokers were encouraged to switch to the safer and cheaper alternatives, as till now the devices are exempt from taxes.
An imminent 90% tax hike on HnB products
An article published on the Korea Herald said that on the 20th of October, South Korea’s National Assembly’s finance committee discussed the implementation of a tax on e-cigarettes and Heat-not-Burn (HnB) products, that would match the one imposed on regular cigarettes. However, one must point out that since in this article HnB products are wrongly referred to as e-cigarettes, it is unclear whether the tax will be imposed on just HnB products, or on both HnB and e-cigarettes.
The proposed tax raise is of a significant 90%, which would equate to increasing the prices of PMI’s ‘Heets’ and BAT’s ‘Neostiks’, from the current 4,300 range to about 5,000 won (US$4,415) a pack. “We may have to consider raising the price per pack to over 5,000 won, if the government increases consumption taxes,” said a Philip Morris spokesperson earlier this month.
Lawmakers are expected to either pass or reject this bill during the upcoming plenary session in early November. If passed, the proposed tax will probably go into effect towards the end of December.
Read Further : The Korea Herald