Experts criticize proposal to drop tobacco prices

Rep. Hong Moon-pyo, secretary general of the main opposition Liberty Korea Party (LKP) said in a radio interview on Sunday that the party had considered fixing tobacco prices in the past to improve people’s health, but that the hike in prices actually led to more consumption.

A day earlier, Rep. Yoon Han-hong of the LKP and 10 other lawmakers from the party sponsored a bill to cut taxes on cigarettes in order to lower the prices to the same level as in 2014. A pack of cigarettes, now priced at 4,500 won ($4), would be 2,500 won under the plan.

“Tobacco sales in 2015 and 2016 were a lot higher than the government expected,” the lawmakers who sponsored the bill argued. “The purpose of raising the tobacco prices to reduce the smoking rate was ineffective and there are criticisms saying that it put more financial burden on low-income households.”

However, most countries in the world are actively raising the price of cigarettes and it is very rare to find countries moving in the opposite direction.

Canada is one of the few countries that recently lowered tobacco prices. The Canadian government reduced prices in 1994 after tobacco smuggling increased due to a continuous hike in prices from 1980 to 1993. But after the decision to lower the prices, tobacco sales in Quebec alone jumped 175 percent so the Canadian government decided to raise them again in 2002.

France, on the other hand, where tobacco prices are already the third most expensive among European Union countries, announced that it will raise them again earlier last month to about 10 euros ($11). The United Kingdom also raises prices every year in line with inflation.

Cigarettes in Korea, even after the 2015 price hike, are still among the cheapest in OECD member states, generally somewhere between fourth and sixth from the bottom.

“It is unprecedented in the world to discuss lowering tobacco prices after raising them,” said Cho Hong-jun, a professor of family medicine at Asan Medical Center. “Many countries in the world are trying to toughen regulations since it is even hard to lower the smoking rate by 1 percentage point.”

Some also disagree with the LKP’s argument that the hike in prices had a limited impact on lowering the number of smokers in the country.

According to the Ministry of Health and Welfare, the smoking rate for male adults remained above the 40 percent level starting from 2007, but dropped to 39.3 percent in 2015. This was the first time that the figure dropped below the 40 percent level since records began.

The smoking rate for male teenagers never fell below the 14 percent level up until 2014, but the figure dropped to 11.9 percent in 2015 and 9.6 percent in 2016.

Sales of tobacco products also dropped significantly when compared to the past. In 2014, a total of 4.36 billion packs of cigarettes were sold in the country but this figure fell to 3.33 billion in 2015, which was when the new prices went into effect. It rose slightly in 2016 to 3.66 billion. Sales fell 3.9 percent year on year to 1.71 billion packs during the first half of the year.

“The impacts of raising tobacco prices comes in the long term, or more than 10 years,” said Lee Sung-kyu, a professor of public administration related to medical science at Hanyang University. “Sales of tobacco remained high at above 4 billion packs a year but it dropped to where it is now due to the hike in prices.”

Generally, smoking rates and tobacco prices are inversely proportional.

Frank Chaloupka, an economics professor at the University of Illinois at Chicago, studied changes in tobacco prices and consumption for 52 countries from 1996 to 2011, and he found that consumption drops when prices go up. In countries like Brazil and Mexico, tobacco sales dropped significantly after the prices went up and Korea is experiencing similar changes after 2015.

“Lowering the prices is not the solution,” said Cho Hong-joon at Asan Medical Center. “In order to lower the smoking rate further, the government needs to come up with various antismoking policies focusing on vulnerable social groups like low-income households and teenagers.”

BY CHUNG JONG-HOON [kim.youngnam@joongang.co.kr]