Korea’s tobacco industry speculates tax rise on electronic cigarettes

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South Korea’s tobacco industry is speculating that the government could raise taxes on cig-a-like e-cigarettes to increase tax revenue even after it faced fierce backlash from the sector and smokers when the finance minister commented on the possibility.

The remark was made by the country’s Economy and Finance Minister Choo Kyung-ho in a plenary session at the National Assembly on April 17. In the session, Bae Jun-young, a lawmaker from the governing People Power Party, asked Choo a question about the government’s stance on taxing e-cigarettes, saying that “cig-a-like e-cigarettes contain harmful toxins like regular cigarettes.”

“I was aware that some officials from the Ministry of Health and Welfare recommended that e-cigarettes be classified as tobacco products, like other regular cigarettes,” said Choo, indicating that cig-a-like e-cigarettes should be taxed at a rate equivalent to tax on regular tobacco products if the two have the same level of harmful effects on the human body.

Cig-a-like e-cigarettes are currently taxed lower than regular nicotine delivery systems. For regular cigarettes priced at 4,500 won ($3.39) per pack, the government levies a tax of 3,323 won, including a special consumption tax of 594 won and excise tax. For e-cigarettes, however, the tax amounts to only 90 percent of the regular tax at 3,004 won.

A pro-smoking advocacy group in the country released a statement on Wednesday to oppose the possible tax increase on electronic products. “Ten million tobacco users are deeply concerned about the chance of an increased tax on e-cigarettes, which will raise the prices of entire tobacco products,” the group said. “This is nothing but a ploy to use taxpayers as the source of funds to solve the lack of tax revenue.”

The Ministry of Economy and Finance said that “there is no consideration on raising tax on e-cigarettes.”

“The Economy and Finance Ministry had hinted at the possibility of a tax increase if the Health and Welfare Ministry considers e-cigarettes to be as harmful as combustible products, and the Health and Welfare Ministry has said in its campaigns that there is no significant difference between cig-a-like e-cigarettes and regular nicotine products,” said an unnamed official from the tobacco industry.