October 9, 2010 - A state-run health institute has proposed tripling the price of cigarettes to effectively lower Korea’s notoriously high rate of male smokers, the second highest among the member nations of the Organization for Economic Cooperation and Development (OECD).
Currently, Korea’s male smoker rate hovers around 45 percent, compared with 17.9 percent in the United States and 19.9 percent in Canada, according to the OECD Health Data 2010.
An average pack of 20 cigarettes is sold at 2,500 won ($2.2) here, one of the lowest, if not the lowest, among the OECD countries. A pack of cigarettes costs around $4.17 in Greece, $4.75 in Japan, $7.28 in France, $9.94 in the U.K., $11.1 in Ireland and $10.80 in New York, according to Bloomberg and the Tobacco Manufacturers’ Association in London.
Few deny that an increase in tobacco prices would reduce tobacco consumption, but the majority of smokers remain skeptical about such a drastic pricing policy, raising questions about fairness and concerns over possible side effects.
In a recent report, the Korea Centers for Disease Control and Prevention (KCDC) Korea Centers for Disease Control and Prevention (KCDCP) claimed that a cigarette price hike would be the most effective policy tool to deter smoking. Using SimSmoke, a computer simulation model of tobacco control policies, it has concluded that a gradual price increase to 8,000 won 7.14 USD) per cigarette pack by 2020 would lower the country’s male smoking rate to around 25 percent in a decade. (South Korea - study finds higher prices most effective method to discourage smoking..)
A World Bank report shows that a 10 percent increase in price would lead to a 4 to 8 percent drop in tobacco demand. Experts say an increase in price would have more of an impact on younger people as teenagers and those in their early 20s would find it difficult to afford such a habit. They claim that a 10 percent increase in price would lower youth smoking rates by some 6 percent and reduce the average number of cigarettes consumed by them by 12 percent.
The majority of policy makers, including new Health Minister Chin Soo-hee, have expressed their support for the KCDCP’s pitch. “It will be inevitable to raise cigarette prices as non-price policies alone cannot curb the smoking epidemic,” Chin told the press on Sept. 17. “The government is pushing a price hike not for the sake of raising additional funds for its health insurance budget, but to lower the smoking rate.”
Korea has seen moderate success when it has raised tobacco prices. When the government increased taxes to raise the average price of a pack of cigarettes from 1,800 won (1.61 USD) to 2,000 won (1.78 USD)in 2002, it witnessed the percentage of male smokers drop from 61 percent to 57 percent in a year. When it increased the price by another 500 won (0.45 USD) to 2,500 won (2.23 USD) in 2005, the smoking rate fell by 8 percent in the following year.
The KCDCP’s call for a price of 8,000 won (7.14 USD) per pack coincides with results of a Ministry of Health and Welfare survey carried out on some 3,000 adults nationwide this year. When the ministry asked about an ideal cigarette price to discourage smoking, the average figure was 8,511 won, suggesting that addiction to cigarettes is so strong that only a dramatic increase will have an impact.
A 2010 poll of 12,000 people by broadcasting station KBS found that only 23 percent of the surveyed smokers said they would stop smoking if the average cigarette price doubles to 5,000 won (4.46 USD). Of them, 28.6 percent answered that they will keep smoking no matter how high the price may go up. Minister Chin and other non-smokers will face an uphill battle to persuade nicotine addicts, who currently pay slightly more than 1,500 won (1.34 USD) in taxes for a pack of cigarettes, to pay more. The KBS survey shows that 66 percent of Korean smokers are still opposed to the idea of a price increase, though 74 percent of non-smokers support an increase in tobacco tax.
Many remain critical about a cigarette price hike, arguing that it would result in serious side effects, such as an increase in tobacco smuggling, and worsen economic polarization. Francesca Cornaglia from the University of London claims that smokers may buy fewer cigarettes when the price goes up, but inhale more deeply or smoke more of the cigarette to ensure nicotine levels in the body remain constant. “When that happens, the filter doesn’t really work for the second half of the cigarette as good as it does for the first half because it has already absorbed tar and substances,” she said. “So the second half of the cigarette actually gets filtered less properly than the first half.”
Other experts claim that a price increase will have negative effects on people in poverty and those less educated, who have a much higher smoking rate. They say those more educated and financially stable are more aware of the harmful effects of smoking and have a higher tendency to stop smoking when the price goes up.
Tobacco smuggling and cross-border shopping is also another concern. In Britain, the high tax-induced price of tobacco products has led to many smokers seeking alternative cheaper sources of cigarettes, both legal (duty-free and cross-border shopping) and illegal (smuggling and bootlegging). It is estimated that non-UK duty paid consumption accounted for 21 percent of the cigarettes and 58 percent of the handrolling tobacco in the U.K.
Rep. Son Sook-mee of the governing Grand National Party claims that authorities seized 762 cases of cigarette smuggling worth 19.5 billion won in Korea between 2006 through July 2010. She says smuggling and related crime will skyrocket once the government introduces a price hike in tobacco prices, noting that cigarette smuggling to Korea increased 16 times in 2009, compared to the previous year.
“Smuggled cigarettes will also pose a great health risk to the public as it is difficult to find out when they were made and what kind of toxic chemicals were added in them due to a questionable manufacturing process,” Son said.
Doctors say life expectancy decreases about 12 minutes per cigarette and 30 percent of heart ailments are linked to smoking, which causes more deaths than alcohol, AIDS, illegal drugs, auto accidents, fire, murder, and suicide combined. The World Health Organization (WHO) claims that smoking is also a leading cause of preventable death, with 100 million deaths attributed to it during the 20th century, and nearly one billion deaths projected for the 21st century.
In Australia, about 300,000 people quit smoking in the two months after the government increased tobacco excise by 25 percent in April this year. (Australia - tobacco tax increase results in more people quitting..) A survey by pharmaceutical company Pfizer found that 1.2 million, or 38 percent, of smokers attempted to quit after the surprise tax increase at the end of April. In comparison, some 29 percent of smokers attempted to quit in the three months before the tax hike. Overall, 9 percent of smokers successfully quit in May and June and 29 percent said the price increase had led to them smoking fewer cigarettes.
Reference: Will tax hike effectively curb smoking? by Lee Tae-hoon, The Korean Times, 10/4/2010.
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