Minister Jung Eun-kyeong of the Ministry of Health and Welfare said at a press briefing last month that "both price and non-price policies must be mobilized to respond to the spread of e-cigarettes, flavored cigarettes, and synthetic nicotine." It is interpreted as suggesting the need to raise cigarette prices. Cigarette prices have been frozen since they were raised from 2,500 won to 4,500 won in 2015.
However, the Ministry of Health and Welfare, which oversees national health policy, cannot push through a cigarette price hike on its own. That is because more than 70% of the price of cigarettes consists of taxes and levies. Taxes fall under the jurisdiction of the Ministry of Finance and Economy, while only the levy is handled by the Health Ministry. A tax hike requires consultation with the Finance Ministry, and raising the levy requires amending the relevant law, which needs cooperation from the National Assembly.
The Health Ministry and the Finance Ministry have long differed over raising cigarette prices. The Health Ministry says prices should be raised to the Organisation for Economic Co-operation and Development (OECD) member average (9,869 won) to reduce the smoking rate, while the Finance Ministry has opposed the move, saying it could increase the public's burden amid inflation. This time as well, the Finance Ministry was said to be negative about raising cigarette prices.
◇ Health Ministry: "Korea's cigarette prices are less than half the OECD average... to reduce smoking rates, prices must go up"
The price of cigarettes (4,500 won) consists of ▲ distribution margin and manufacturing cost 1,182 won ▲ cigarette consumption tax 1,007 won ▲ National Health Promotion levy 841 won ▲ special consumption tax 594 won ▲ local education tax 443 won ▲ value-added taxes and other 433 won.
In the Sixth National Health Promotion Comprehensive Plan (2026–2030) released in March, the Health Ministry said it would raise the National Health Promotion levy paid by tobacco manufacturers and import distributors. Minister Jung Eun-kyeong said on the 16th on KBS Newsline that "cigarette prices in Korea are low compared with OECD countries and it has been a long time since they were last raised."
The Health Ministry is pushing a price hike because it judges that it is effective in lowering the smoking rate. The government set a goal of reducing the adult male smoking rate from 28.5% in 2024 to 25% in 2030, and the female rate from 4.2% to 4.0%. Earlier, in 2015, when cigarette prices were raised to nearly double, annual cigarette sales (3.33 billion packs) plunged 24% from the previous year.
A decline in the smoking rate can also help the National Health Insurance finances. According to analysis by the National Health Insurance Service Research Institute, medical expenditure due to direct and indirect smoking in 2024 is estimated at 4.6 trillion won. Of that, 82.5% was borne by National Health Insurance finances.
◇ Raising the levy requires National Assembly cooperation... the Finance Ministry is negative on tax hikes
To raise the Health Promotion levy as planned by the Health Ministry, the National Health Promotion Act must be amended. According to a nationwide survey conducted by Hankook Research on May 31 to mark World No Tobacco Day, 63%—more than 6 out of 10 people—favored raising the tobacco tax. While this can be interpreted as public opinion being positive toward a price hike, negative views also exist, making it uncertain whether the National Assembly will actively cooperate.
There is also a way to raise the taxes levied on cigarettes, but this falls under the jurisdiction of the Finance Ministry, which oversees price policy. The Finance Ministry has been negative about raising cigarette prices on the grounds that it could increase people's inflation burden. In 2004, when the Health Ministry raised the price of cigarettes from 2,000 won to 2,005 won, the Finance Ministry publicly opposed it, saying it "would burden prices and lead to problems such as smuggling of foreign cigarettes."
The Finance Ministry is reportedly unlikely to include a plan to raise tobacco taxes in the 2027 tax reform plan to be announced soon. With consumer price inflation running high—exceeding 3% in May and June due to the Middle East war—raising cigarette prices as well could increase the public burden. A Finance Ministry official said, "With inflationary pressure rising due to higher oil prices from the Middle East war, it is not easy to begin reviewing a cigarette price hike."