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Beer is a favorite drink in South Korea, especially when there is a get-together or party. However, most Korean may now decide to drink less beer as a new tax is set to be imposed in April.
The country is raising its liquor tax thus, prices of beer are expected to increase again. It was reported that starting April 1, liquor tax on beer and rice wine will be 3.57% higher. The increase is equivalent to KRW30.5 or $0.02 per liter.
The price hike on beer due to higher tax was confirmed by the Ministry of Economy and Finance this week. It has announced a revised rule on Individual Consumption Tax Act and the Liquor Tax Act.
As per Pulse News, major breweries in South Korea such as Lotte Chilsung Beverage Co., HiteJinro Co., and Oriental Brewery Co. already hiked up prices of their beer products by more than seven percent last year due to inflation that has been gripping the country and other nations.
It was said that since 2020, the liquor tax rate on beer and rice wine has been adjusted based on the rising inflation rate. This was the time when the government decided to shift from a value-based to a volume-based taxing system.
In 2022, inflation also blew up consumer prices as it surged to 5.1%, which was said to be the country’s highest level in the last 24 years. In response, the officials decided to lift the liquor tax by 3.57%, which is 70% of the inflation level.
Meanwhile, the authorities are allowed to rework the tax increase ranging from 70 to 130% of the current inflation rate. This time, they chose the lowest percentage possible out of consideration to consumers who they already know are already burdened by the high prices of commodities today.
Photo by: Gerrie van der Walt/Unsplash
