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Korea passes bill to increase tax on HnB products

Last Thursday on the 9th of November, the parliament of South Korea passed a bill that will raise the tax on heat-not-burn tobacco products (HnB) by 90%.

Diane Caruana

November 13, 2017

So far, South Korea had categorized e-cigarettes differently than their combustible counterparts, hence iQOS is currently levied at a lower tax rate than the 75% imposed on regular cigarettes.

Then last October, Korea’s National Assembly’s finance committee discussed the possible implementation of a tax on Heat-not-Burn (HnB) products, that would match the one imposed on regular cigarettes. The bill was passed last Thursday.

Taxing safer alternatives as much as deadly cigarettes

“HNB cigarettes should be categorized as conventional cigarettes as they use the same tobacco and emit smoke, which is similar to the harmful smoke released by traditional cigarettes,” said a mistaken Rep. Kim Gwang-lim of the major opposition Liberty Korea Party a few months back.

Public Health experts will agree that taxing safer alternatives as their deadly counterparts, will prove counterproductive to Korea’s anti-smoking efforts.

HnBs are battery operated smokeless alternatives to combustible cigarettes and work by heating sticks containing tobacco leaves. These refills which look like short cigarettes, must be inserted into the devices and are heated up once they are turned on.

During the plenary session, 230 out of 239 present lawmakers voted in favour of the bill, with one disapproval and eight abstentions. The tax raise which is expected to go into effect next month, will increase 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 last month.

Tax revenue vs public health

South Korea has been actively fighting smoking, infact earlier this year the Ministry of Health and Welfare of South Korea, had successfully implemented a regulation that forces cigarette manufacturers to put graphic images of the harmful effects of smoking on cigarette packets. Research keeps indicating that HnB products are safer than their combustible counterparts, hence Public Health experts will agree that taxing them in the same way as their deadly counterparts will prove counterproductive to this movement.