Smoking rebounds after tax-hike setback

By Choi Sung-jin

Korean people’s spending on tobacco, which fell after the government raised the cigarette consumption tax early last year, increased again this year, Statistics Korea said Thursday.

Only some low-income people reduced tobacco-related expenses, the state statistical agency said.

According to household survey data, the average monthly spending on cigarettes by households with two members or more in the second quarter totaled 23,000 won ($20.60), an increase of 10.9 percent from a year ago.

In real terms, after excluding price hikes, the monthly average spending on tobacco products in the April-June period was 13,000 won, also up 10.9 percent from the same period last year.

That means Korea’s cigarette consumption, which hit rock bottom because of the tobacco tax hikes, is rebounding, the state statistical office said.

The problem is only people in low-income brackets whose lives have become tighter tended to smoke less, an official said.

Those whose income belongs to the bottom 20 percent spent 16,000 won a month on cigarettes, down 6.6 percent. On the other hand, those whose income belongs to the bottom 20-40 percent spent 22,000 won, up 1.2 percent.

Tobacco-related expenses by the income brackets of 40-60 percent, 60-80 percent and 80-100 percent increased 19.8 percent (28,000 won), 11.7 percent (23,000 won) and 25.3 percent (26,000 won), respectively.

Real tobacco expenses, excluding price-hike effects, fell 3.5 percent (8,000 won) among people with monthly income of 1 million won or less, 5.3 percent (9,000 won) among those with income of 1-2 million won, and 0.9 percent (12,000 won) for those with 2-3 million won of income.

But people who earn 6 million or more a month increased their spending by 27.4 percent (14,000 won) and those with 3-4 million won in monthly income raised their cigarette expense by 22.7 percent (15,000 won).

The two groups in higher-income brackets smoked cigarettes at similar levels to 2014, before the government raised the tobacco tax, the office said.

Some low incomers quit smoking or sharply reduced their tobacco-related spending because they could not afford the higher prices, it said.