2016-07-27 :
High tobacco tax means low happiness, acute corruption: report
By Choi Sung-jin

The higher the share of tobacco taxes in a country’s total revenue, the lower its people’s sense of happiness and perception of corruption, a study said Wednesday. 

The Korea Federation of Taxpayers and Rep. Yun Ho-jung of the opposition Minjoo Party of Korea said they reached the conclusion after analyzing correlations among the portion of tobacco tax revenue, the degree of happiness and the corruption perception index of 34 OECD member countries. 

For example, Turkey, which showed the highest share of tobacco tax revenue, was 33rd in the corruption perception index. Israel did not provide the related data. 

Hungary and Greece, whose shares of tobacco tax receipts were ranked at second and fourth places, respectively, ranked at 29th and 31st places on the corruption perception index out of the 33 nations surveyed, according to the joint report. 

Korea, whose cigarette tax portion is 12th largest, was 27th on the corruption perception index. 

Countries with high portions of tobacco tax showed low degrees of national happiness, too. The top-four countries in cigarette tax share -- Turkey, Hungary, Poland and Greece -- were ranked at 31st, 32nd, 27th and 34th places, respectively, in the national happiness index. Korea was in 28th place. 

In addition, these countries collecting relatively larger tobacco taxes than others had bigger underground economies. 

Turkey’s underground economy was largest and those of Hungary, Poland and Greece were ranked at eighth, fifth and third places while that of Korea was sixth largest. 

According to the federation, the share of tobacco tax receipts in the Korean government’s total revenue was 2.63 percent in 2013. The portion edged up to 2.67 percent in 2014 and jumped to 3.72 percent last year after the government raised tobacco prices by 80 percent. 

“Countries with high shares of tobacco tax have low social transparency and a high portion of underground economy, and their unfair tax systems have led to serious income inequity and low national happiness,” a federation official said. 

The report was made based on the comparison of four separate statistics -- rankings of tobacco tax shares (2013), the U.N.’s World Happiness Report (2016), rankings of the shares of underground economy (2012) and the corruption perception indexes released by Transparency International (2015) -- to produce a correlation coefficient, the official said.