.jpg/dims/resize/740/optimize) |
| Chong Il-woo, PMI Korea CEO |
.jpg) |
| Tony Hayward, BAT Korea CEO |
Multinational tobacco companies are slamming what they call Korea's policy inconsistency as lawmakers are poised to pass a revised bill to hike taxes on heat-not-burn (HNB) e-cigarette products.
Philip Morris International (PMI) Korea and British American Tobacco (BAT) Korea say they have released smokeless cigarette devices and tobacco sticks in Korea, thinking tax rates and other regulatory standards would remain unchanged for a considerable period of time.
In May, PMI Korea, headed by CEO Chong Il-woo, began selling the IQOS, an electronic device designed to heat HEETs, while BAT Korea, headed by CEO Tony Hayward, introduced glo and its tobacco Neostiks, early this month. Both HEETs and Neostiks are priced at 4,300 won ($3.77) for a pack of 20.
The two cigarette brands argue the National Assembly's move to raise excise taxes levied on a pack of 20 HNB sticks from the current 126 won to 594 won is unfair and makes it difficult for them to do business in the country. Smokers pay a 594 won excise tax when purchasing a pack of standard cigarettes.
They say HNB cigarettes are less harmful than conventional ones, stressing it is not fair to impose the same amount of taxes on both.
On Tuesday, the National Assembly Strategy and Finance Subcommittee passed a bill revision to increase the excise tax on HNB cigarettes to 594 won. Both ruling and opposition parties are expected to approve the revision in a plenary session later this month. The change will then go into effect in September.
The lawmakers are also considering raising a consumption tax and a health promotion fee on HNB products, which would force PMI and BAT to raise the prices of HEETs and Neostiks to as high as 6,000 won.
"The latest excise tax hike is a classic example of Korea's policy inconsistency that foreign companies here have been complaining about for years," a PMI Korea official said.
"We set the price of a pack of HEETs at 4,300 won and tailored our sales and marketing activities in accordance with the current regulatory and business environment. But the lawmakers are abruptly changing the rules of the game. It's been only four months since the IQOS became available to Korean consumers. We are just dumbfounded by the latest excise tax hike," the official said.
He said no country in the world has so far imposed the same tax on both HEETs and conventional cigarettes, stressing its HNB cigarettes are less harmful to users.
"We have so far introduced the IQOS in 25 countries but Korea is the only one seeking to subject it to the same tax rate as standard cigarettes," he said. "We think the nation shouldn't because a HEET produces about 90 percent less harmful chemicals than a standard cigarette does. If Korea increases taxes, we have no choice but to charge consumers more, which we don't want to do under any circumstances."
BAT Korea echoed PMI Korea's views, saying lawmakers are only concerned about collecting more taxes from consumers, disregarding its implications on public health.
"We believe lawmakers and the government should make HNB e-cigarette products more affordable for consumers because they are less harmful," a BAT official said.
"But they are doing exactly the opposite by raising the prices through a tax hike. Lawmakers seem to be only interested in bolstering tax revenue, while turning a blind eye to improving public health. The Assembly must not pass the revision," he said.
![[INTERVIEW] Ex-NIS chief urges politicians to stop misusing spy agency](https://img.koreatimes.co.kr/upload/thumbnailV2/59da8df88faa4a50ad42945501b03bca.jpg/dims/resize/178/optimize)
![[REVIEW] Musical 'Monte Cristo' returns with riveting tale of vengeance, love](https://img.koreatimes.co.kr/upload/thumbnailV2/3934be1fa6844478b619a015d610bc5b.jpg/dims/resize/178/optimize)
![[INTERVIEW] Meet the man behind giant rubber ducks that once took over Seoul](https://img.koreatimes.co.kr/upload/thumbnailV2/df32c60c8204448e98ccdb9841366bec.jpg/dims/resize/178/optimize)
