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[FOUNTAIN]Cigarette price hikes still rankle

July 14,2003
This was the first morning news of July 16, 1980: “Beginning from midnight, the government raised the price of cigarettes by 40 percent on average. Geobukseon and Taeyang rose from 300 won to 450 won per pack. Sol, a new high-quality brand, is expected to be introduced this August.” A sudden price increase is news that smokers have often heard. “People say they blow up the weariness of life into cigarette smoke, but I burn up the distrust of government,” one smoker wrote on an Internet bullet board.
In the past, cigarette price policy was devised by rule of thumb. Because cigarettes are harmful to health, the government could easily raise the price, unlike other fees. In 1962, the government raised the price of 11 brands, such as Pagoda and Geumgwan, by a maximum 60 percent. Other commodity prices also rose, however, and the cabinet head, Kim Hyeon-cheol, acknowledged that “the rise was a mistake.” In 1982, the government raised prices but later acknowledged the range of price hikes was too broad and lowered the price of Eunhasu and Hansando from 350 to 330.
To ease rejection from smokers, “tactics” were often used. By introducing high-priced brands whose quality was no better than existing ones, while reducing the production of existing low-priced cigarettes, the government raised the actual price. Such was the case with the Sintanjin brand introduced in 1965.
More often than not, the pretext and method of the price increases was poor and clumsy. The government raised the price to pursue its economic development plans in the 1960s and 1970s; to expand financing for education in the early 1980s; and to recoup losses in health insurance financing in the current decade.
The Ministry of Health and Welfare recently announced a plan to raise cigarette prices by 1,000 won, and an additional 2,000 won by 2007. The ministry said “revenues from the increase will never be used to increase tax yields.” The policy seems to be an advance from the past in that its purpose is quite clear and the plan is gradual.
The reaction from smokers is cold because of negative memories of past policies. “When the cigarette price rises, people have difficulty in bumming a cigarette, while the government fattens its wallet,” one Internet user said in a comment titled “The cigarette industry is still a government monopoly business.”


by Lee Kyu-youn

The writer is a deputy city news editor of the JoongAng Ilbo.


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