The impact of cigarette tax increases on men's smoking behavior: Evidence from a 2015 cigarette tax hike in South Korea

Abstract

This study examines whether a 114% hike in the cigarette tax in South Korea in 2015 deterred men's smoking behavior including: smoking status in the present year, average number of cigarettes per day, willingness to quit smoking within six months, and smoking status change over two years. Using the Korea Welfare Panel Study (KOWEPS) which is large-scale panel data, this paper finds that smoking rates dropped significantly in the post-tax period as supported in other papers. In further examination of people's smoking status change over two years, this paper finds that a significant number of smokers became nonsmokers after the tax increase, while the number of new smokers became smaller. It is also found that continuous smokers smoked fewer cigarettes in the post-tax period. Right after the tax hike, people's willingness to quit smoking increased in 2015, but this did not result in a further decline in smoking rates in the following year. The deterrent impact in 2015 was observed with a similar degree among various expenditure, age and regional groups.