Government Plans 'Health Promotion Levy' on Alcohol
Tobacco Prices to Rise to OECD Levels... About 8,000 Won
Public Backlash, 청원 Petitions Submitted
Experts Say "Price Increase May Not Significantly Reduce Demand"
[Asia Economy Reporter Kim Young-eun] "Are they really thinking about the people?", "It's already so hard, and now they're telling us not to drink or smoke..."
The government announced plans to impose a 'health promotion surcharge' on alcoholic beverages such as soju and beer, similar to tobacco, and to raise tobacco prices to over 8,000 won, the average among OECD countries, sparking opposition mainly from smokers.
On the 27th, the Ministry of Health and Welfare (MOHW) announced the '5th National Health Promotion Comprehensive Plan' (Health Plan 2030, 2021?2030), which outlines the direction and tasks of health policy for the next 10 years, following the 2nd Social Relations Ministers' Meeting.
This plan contains the government's health policy direction and tasks for the next decade, with the core goal of extending the healthy life expectancy of Koreans, which was 70.4 years in 2018, to 73.3 years by 2030. Healthy life expectancy refers to the years one can live daily life in good health.
To achieve this, the government plans to strengthen both price and non-price regulations on tobacco and alcohol, which are major health risk factors. The aim is to reduce the number of people consuming alcohol and tobacco by raising prices through increasing tobacco prices and imposing surcharges on alcoholic beverages. However, the MOHW stated on the 28th that the specifics regarding the extent and timing of the tobacco price increase have not yet been decided.
The MOHW said, "We will consider price policies such as imposing a health promotion surcharge on alcoholic beverages to encourage reduced alcohol consumption." Additionally, they plan to strengthen regulations on alcohol advertising, including legislation on drinking restrictions in public places, guidelines for local governments on operating alcohol-free zones in public areas, expanding the ban on alcohol advertisements during specific hours (7 a.m. to 10 p.m.) from TV broadcasts to internet and data broadcasting, and prohibiting the attachment of alcohol bottles in advertising model photos.
They also announced plans to raise tobacco prices to the OECD average level. According to data released by the World Health Organization (WHO), the average tobacco price among OECD countries is about $7.36 (approximately 8,137 won), while the current domestic tobacco price is 4,500 won, roughly $4.
Lee Se-ran, Director General of the Health Policy Bureau at the Ministry of Health and Welfare, is explaining the 5th National Health Promotion Comprehensive Plan on the afternoon of the 27th at the Government Complex Sejong in Sejong City. Photo by Yonhap News
Lee Se-ran, Director of the Health Policy Bureau at the MOHW, said at a briefing that "There is a bill submitted to the National Assembly to raise the health promotion surcharge, so it is possible that the surcharge will be increased within 10 years," but added, "The exact timing and amount of the increase have not been decided." She further explained, "First, we will look at how other countries impose health promotion surcharges on harmful products and conduct research on the impact of imposing such surcharges in Korea before proceeding with discussions."
Although the specifics such as timing have not been set, news that tobacco and soju prices may increase sparked heated reactions among netizens.
While the policy is for public health, some expressed concerns that it could be a burden on consumers immediately, and others criticized that the purpose of the price increase might not be for public health but rather to increase tax revenue.
There is also a negative view that such increases are inappropriate given the rise in alcohol and tobacco consumption amid increased social distancing and restrictions due to the COVID-19 pandemic, which has led to collective fatigue.
In fact, the year-on-year increase rate in spending on alcohol and tobacco in the third quarter of last year was 6.2%, the highest in about four years since the second quarter of 2016 (6.5%). According to the Statistics Korea Household Trend Survey, the average monthly household expenditure on alcoholic beverages and tobacco for households with two or more people last year was 42,980 won, the highest since 2003. Both alcohol (19,651 won) and tobacco (23,329 won) consumption expenditures were the highest recorded since statistics began.
One netizen commented, "So many people these days find strength in a drink, and raising prices like this feels like telling us not to drink or smoke in these tough times, which will only cause more resentment," adding, "There must be other measures besides price increases. It's too burdensome to claim it's for public health."
There were also criticisms that this price increase contradicts former President Moon Jae-in's campaign promise to lower tobacco prices ahead of the last presidential election. Netizens responded with comments such as "Promises should be kept" and "The government said they wouldn't raise prices but are doing it themselves?what kind of mindset is that?"
On the 27th, a petition titled "Opposition to the Implementation of the MOHW's 5th National Health Promotion Plan" was posted on the Blue House's National Petition Board. The petitioner said, "This is truly shocking and devastating news. I feel betrayed by the government," and added, "Excluding the cost, taxes make up a large portion of tobacco prices, so raising tobacco prices to OECD levels at this time sounds like the government is trying to collect more taxes to cover the difficult fiscal situation caused by COVID-19."
The petitioner continued, "Ordinary people cannot drink expensive whiskey or smoke costly cigars like the wealthy. They soothe and encourage themselves through a simple glass of soju and a cigarette as they move forward in their hard lives," and questioned, "If the government is the one taking away such small happiness, will there be any citizens willing to support the government?" The petition has received preliminary consent from over 100 people and is currently under review for public disclosure by the administrator.
Amid ongoing controversy, the MOHW stated on the 28th that plans related to tobacco price increases have not been concretely decided. Son Young-rae, spokesperson for the MOHW, said at a regular COVID-19 briefing held at the Government Complex Sejong in the morning, "There were reports that alcohol and tobacco prices would be raised immediately, but no such review has been conducted, and no specific promotion has been made," adding, "Since this is a time to focus on COVID-19, this matter is not currently under review."
Experts pointed out that even if prices of alcohol and tobacco are raised, it would be difficult to expect a significant reduction in consumption. Professor Kim Tae-gi of Dankook University's Department of Economics said, "Demand for alcohol and tobacco is inelastic, so there are people who will seek them regardless of price," adding, "This will be a heavy burden for those people." He further predicted, "Because of this inelasticity, even if prices rise, it is unlikely that many people will drastically reduce their consumption of alcohol and tobacco, so the effect will not be significant."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
