hankyoreh

2012

By Kim Yang-joong, staff reporter

A bill to revise the law was presented to the National Assembly that would raise the price of a pack of cigarettes by from 2,500 to 4,500 won (US$2.25 to $4). Jin Young, nominee for Minister of Health and Welfare, said that he supports adding a health promotion charge to tobacco and alcohol prices, reigniting the long-simmering controversy over this issue. While some are criticizing the proposal, saying that it is in effect an indirect tax on alcohol and tobacco to raise funds for welfare, others argue that this is a good opportunity to raise the price of tobacco in order to reduce smoking, which is a cause of numerous diseases, including several kinds of cancer.

On Mar. 6, Kim Jae-won, a lawmaker with the ruling Saenuri Party (NFP), presented a bill that would partially revise the Local Tax Act and the National Health Promotion Act by raising the price of a pack of cigarettes 2,000 won from its current level.

“The policy of periodically raising the price of cigarettes by 500 won at a time has no significant effect at reducing smoking, and it is hard to avoid criticism that it is an anti-populist policy that empties the pockets of smokers,” Kim said in a press release. “If we raise the price by 2,000 won, we expect the amount of tobacco consumption to fall by 29%, achieving the original goal of the anti-smoking price policy.”

“By increasing the cost of cigarettes, the health promotion fund would increase from its current level of 1.5 trillion won (US$1.35 billion) to 3.5 trillion won (US$3.16 billion). This money must be used in programs to help smokers kick the habit, as well as in other health promotion projects for people in low income brackets,” Kim added.

In addition, in a confirmation hearing held in the National Assembly on the same day, minister nominee Jin Young said, “I support an increase in the price of cigarettes. We should also consider adding a health promotion charge to alcohol, along with tobacco.”

The proposal to raise the price of cigarettes and to also place a health promotion charge on alcohol has been variously advocated and discussed since the Roh Moo-hyun administration (2003-2008). But with the proposal being raised once more after the inauguration of Park Geun-hye, who has maintained that she will increase welfare without raising taxes, there is criticism that the new administration is aiming to raise funding for welfare by increasing the price of cigarettes.

“If you raise the price of cigarettes by 2,000 won, the health promotion fund will increase to a level that is about 4 trillion won (US$3.61 billion) higher than it is today, providing financial support for health insurance,” said Park In-taek, secretary general of the Korean Smokers Association. “In the end, isn’t this just an effort to keep the pledge to provide 100% coverage of treatment for the four major categories of disease (cancer, cerebrovascular, cardiovascular, and rare) by emptying the pockets of ordinary Koreans?”

According to the provisions of the current National Health Insurance Act, the health promotion fund is supposed to provide 6% of the expected revenue from health insurance premiums, and in the National Health Promotion Act, up to 65% of the health promotion fund can be used for financing health insurance.

Last year, the expected revenue from insurance premiums was 35.8 trillion won (US$32.32 billion), so the fund was supposed to provide 6% of this sum, or 2.1 trillion won (US$1.9 billion), in support, but it actually only provided 1 trillion won. This is because, at the time, there was 1.5 trillion won in the fund, and 1 trillion is 65% of this amount. The upshot is that, through last year, a shortage in the fund has meant that it has not even been able to provide the amount of funding mandated by law. Of course, if cigarette prices go up, the health promotion fund, which is used to support health insurance, will increase, but the amount of support it can provide is limited to 2.1 billion won.

“The price of cigarettes has been kept in place for eight years,” said Seo Hong-gwan, chairman of the Korean Association on Smoking and Health. “The smoking rate will not go down until the price is increased by at least 2,000 won. To compensate smokers, the money raised from increasing the price should not be employed in other ways but should be used in programs to help smokers beat their addiction, for health insurance coverage of anti-smoking treatment, and for providing low wage earners with free medicine to help them quit smoking. If this money is used for other purposes, it is inevitable that the move will be criticized as nothing more than a bid to squeeze even more tax money out of the working class.”

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