Japan to Raise Tobacco Tax by 4 Cents a Cigarette

Starting next October, the Japanese will pay 4 cents (3.5 yen) more per cigarette, Bloomberg reports. That’s in addition to the 1.5 yen per cigarette tobacco companies will add. Japan is the world’s fourth-largest cigarette market.
The tax increase is the first in four years and is part of Prime Minister Yukio Hatoyama’s plan to decrease smoking in an effort to lower health insurance costs. Japan also faces a tax revenue deficit. The 3.5 yen per cigarette raises a 20-pack of cigarettes 33 percent.
Japan Tobacco could increase prices by more than the tax gain to counter an anticipated fall in smoking rates, said President Hiroshi Kimura. “The government will probably keep increasing the tax and more people will stop smoking,” said Mitsuo Shimizu, a market analyst at Cosmo Securities Co.
The fifth in more than 20 years, the tax increase is the biggest, since the previous tax hikes stayed below 1 yen per cigarette. Cigarettes are fairly inexpensive in Japan, with the price of about a third of the cost in the United Kingdom.
Currently, the smoking rate for Japanese men is just over 36 percent last year, with the health ministry predicting that number to drop to around 27 percent with the tax increase.