Rising cigarette prices - bad idea

Published on June 16, 2008 5:21 AM

Lawmakers have proposed raising taxes on Japanese cigarettes, because Japan is a country where smoking kills about 100,000 people every year.

Japan Tobacco Inc., the world's third-largest cigarette maker, stated that the higher cigarette taxes would devastate the nation's tobacco industry and consumers too.

Japanese president Hiroshi Kimura, reported that the higher taxes on cigarettes would be disastrous for consumers and the tobacco industry as well. In general any tax hike is going to be very challenging for population.

But researchers think that higher taxes could quicken the decline in cigarette sales in Japan, where the percentage of men who smoke has fallen by half over the past 40 years to about 40 percent because of the increase in health consciousness.

A group of lawmakers from Japan's ruling and opposition parties is scheduled to meet tomorrow to discuss raising taxes.

If cigarette consumption will remain unchanged, increasing the price for a pack of cigarettes to 1,000 yen would add as much as 8.5 trillion yen to tobacco-tax revenue from 2.28 trillion yen raised last year, according to Kyohei Morita, chief economist at Barclays Capital in Tokyo.

According to a study the world’s most affordable cigarettes can be found in the cities such as Taipei and Tokyo.

Taxes currently account 189 yen of the price of a 300-yen packet in Japan.

Kimura said that the government should sell its 50 percent share in Japan Tobacco if it needs to raise revenue rather than increase taxes, because Japanese consumers are very price sensitive.

Th talk of higher taxes comes as Japan Tobacco battles the increasing costs for tobacco leaf, packaging and other raw materials.

From July 1, Japan's 26 million smokers will need a smart card to purchase cigarettes through the nation's 439,000 vending machines.

The so-called Taspo card, designed to reduce underage smoking, is likely to contribute 1 percentage point to the 5.2 percent decline in domestic cigarette volumes forecast for this year, Kimura added.