Japan Considers Higher Cigarette Taxes

TOKYO – Japan is looking into increasing cigarette taxes to fund a new government spending plan, the Wall Street Journal reports. Complicating that plan is partial state ownership of Japan Tobacco.
The world’s biggest tobacco company measured by sales, Japan Tobacco is half-owned by the state. A Japanese health minister put a cigarette tax hike on the table during a TV interview on Sunday.
“Tobacco poses health problems. It may be necessary to raise [the tobacco tax] to the levels in Europe,” said Akira Nagatsuma, minister of health, labor and welfare. The government’s tax panel is already considering raising the tobacco tax as part of reforms for fiscal 2010, at the request of the health ministry.
Currently, a 10-yen-per-cigarette jump is under debate. Such an increase would be 10 times previous increases. The Japanese pay among the lowest amount of any developed nation for cigarettes.
Since the Japanese government has a stake in Japan Tobacco, which accounts for 65 percent of the market share, raising the cigarette tax can be tricky.
“We believe the current excise tax is already at a high level,” said a Japan Tobacco spokesman. “This is based on the fact that in the past, excise increases have shown that there hasn’t been a corresponding increase in revenue, because sales volumes have declined.”