According to a report released by the Legislative Investigation Office of the South Korean National Assembly on February 6th, synthetic nicotine e-cigarettes should be included in the tobacco tax collection scope to address current tax fairness issues and potential health risks.
According to current South Korean law, tobacco is defined as products made from tobacco leaves, stems, roots, etc., while synthetic nicotine e-cigarettes are not included in the tobacco definition category because they do not use tobacco ingredients. This has resulted in synthetic nicotine e-cigarettes not being subject to tobacco taxes in South Korea and not being regulated by tobacco-related laws. The Legislation and Judiciary Committee of the South Korean National Assembly believes that this legal loophole violates the principle of tax fairness and also overlooks the health risks associated with synthetic nicotine e-cigarettes.
According to a report by the legislative research bureau of the South Korean National Assembly, the country has lost approximately 3.3895 trillion South Korean won (around $245.6 million) in tax revenue over the past four years due to the lack of taxation on synthetic nicotine e-cigarettes. In 2021, the tax revenue not collected from synthetic nicotine e-cigarettes in South Korea was 535.8 billion won (around $39.69 million), and by 2023, this number had increased to 1.1249 trillion won (around $78.41 million). In addition to the financial impact, the health risks of synthetic nicotine e-cigarettes have also raised concerns. As they are not regulated under tobacco laws, synthetic nicotine e-cigarettes can be freely sold through online platforms and unmanned vending machines, and even to minors. The legislative research bureau of the South Korean National Assembly has warned that synthetic nicotine e-cigarettes may potentially lead young people to smoking and increase their risk of dependence on traditional tobacco products.
Currently, the majority of countries worldwide have implemented regulations on synthetic nicotine e-cigarettes. The World Health Organization (WHO) recommends that e-cigarettes should be regulated as strictly as traditional cigarettes. 34 countries have banned the sale of e-cigarettes, and 121 countries have implemented advertising bans or tax policies. In the United States, synthetic nicotine will be classified as a tobacco product starting in April 2022, and sales to individuals under 21 will be prohibited.
The South Korean Ministry of Strategy and Finance submitted its opinion on regulating synthetic nicotine to the Parliamentary Committee on Strategy and Finance at the end of last year. However, due to political instability in South Korea, the progress of relevant regulatory measures has been somewhat affected.
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