By Lee Hyo-sik
Staff Reporter
Rises in cigarette prices have turned out to be effective measures to reduce smoking, according to the Korea Institute of Public Finance Monday. South Koreans' smoking rate would likely decrease by 0.41 percentage point if prices of all cigarette products sold here increase by 100 won, it said in a report.
But it does not necessarily mean that the smoking rate will fall by 2.05 percentage points if cigarette prices increase by 500 won because smokers will react differently to the 500 won cut in cigarette prices, the institute said.
In January 2004, the government raised the tax on cigarettes by 500 won a pack to reduce smoking and boost tax revenue, pushing up cigarette prices to between 2,000 won and 3,000 won per pack. According to the Ministry of Health and Welfare, smoking rates dropped from 57.8 percent to 53.3 percent three months later in March and then to 52.3 percent in June.
Since the 500-won tax hike in cigarette prices, government has tried to increase tobacco taxes by another 500 won. But the plan has been set aside for the past three years as the National Assembly is reluctant to raise cigarette prices, fearing a possible backlash from smokers and low-income earners who have opposed the proposed hike.
The institute also said when prices of other cigarette products remain unchanged, the market share of ``Simple'' sold by KT&G at 2,300 won per back is projected to drop by 0.5 percentage point if its price rises by 100 won. Also, the market share of ``Dunhill,'' manufactured and marketed by British American Tobacco, will fall by 0.21 percentage point.
It also said Korean smokers prefer slim-shaped cigarettes to regular ones. An increasing number of smokers have bought cigarettes containing lower amounts of tar. The average tar content per pack of cigarettes fell to 4.13mg in 2005 from 5.88mg in 2002 and 6.31mg in 1999.