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To raise badly needed revenue, the government of Prime Minister Yukio Hatoyama will add 4 cents in taxes to each cigarette sold
Jump to full article: Business Week/Bloomberg, 2009-12-22
Author: Naoko Fujimura
Intro: Japan, the world's fourth-largest cigarette market, will raise tobacco taxes for the first time in four years as the government faces a tax revenue shortfall and tries to discourage smoking.
The Cabinet approved a plan to raise the duty by 3.5 yen (4 cents) per cigarette from Oct. 1 next year, with tobacco companies charging an extra 1.5 yen each. A pack of 20 cigarettes would increase by an average 100 yen, or 33 percent, to 400 yen.
The tax increase, the biggest since Tokyo-based Japan Tobacco Inc. (2914:JP) was privatized in 1985, is part of Prime Minister Yukio Hatoyama's pledge to discourage smoking to curb health insurance costs as the population ages. Japan Tobacco, the world's third-largest publicly traded cigarette maker, may raise prices by more than the tax gain to offset an expected drop in smoking rates, President Hiroshi Kimura said this month.
"The government will probably keep increasing the tax and more people will stop smoking," said Mitsuo Shimizu, a market analyst at Cosmo Securities Co. in Tokyo.
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