HNB tax increase coming

| August 23, 2017

The government of South Korea looks set to raise the tax on heat-not-burn (HNB) products such as Phillip Morris’ IQOS and British American Tobacco’s Glo, according to a story in The Korea Times.

Three lawmakers proposed the tax revision and the National Assembly Strategy and Finance Committee (SFC) said on Monday it would discuss the matter with relevant government agencies.

SFC members reportedly agreed with the lawmakers that the tax on IQOS and Glo was too low because of the absence of a tax code for HNB products.

They will seek to pass a relevant tax-code revision during a plenary session of the National Assembly on August 31 with the aim of its going into effect in September.

The government has asked for the National Assembly’s co-operation in passing the revision during the upcoming plenary session because, otherwise, the revision will have to wait until the next plenary session in December, which, the government said, would be ‘too late’.

Currently, a pack of Heets, the consumable item of the IQOS system, is sold at 4,300 won ($3.78) per pack, which includes 1,739.6 won in tax. A pack of traditional tobacco cigarettes meanwhile, sells for 4,500 won, which includes 3,323.4 won in tax.

Two of the lawmakers who proposed the revision believe that the tax on HNB products should be the same as that on traditional cigarettes, while the other proposer believes the former should be less than the latter.

Members of the strategy and finance committee are said to be trying to find middle ground.

The story quoted an unspecified ‘official’ as saying that the tax rate was only a matter of how much.

“Some said in other countries that the HNB e-cigarette is less harmful than general cigarette products so less tax should be imposed,” the official was quoted as saying. “But it’s not a decisive factor.

“The National Assembly will eventually pass the revision.”

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Category: Breaking News, Harm reduction, Markets, Next-generation products, Tax, Vapor

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