Tobacco tax hike could raise price of Cigarettes to 500 yen per pack

The Liberal Democratic Party Research Commission on the Tax System is discussing a major increase in tobacco tax for fiscal 2009 that could raise the price of Cigarettes in Japan by 200 yen a pack...

The Liberal Democratic Party (LDP) Research Commission on the Tax System is discussing a major increase in tobacco tax for fiscal 2009 that could raise the price of Cigarettes in Japan by 200 yen a pack, despite fierce opposition from the tobacco industry. The price of a pack is almost certain to go up by at least five yen per cigarette, and a raise of 10 yen per cigarette is also on the table, which would push the price of a 300 yen pack of 20 Cigarettes up to 500 yen. While a price increase to 500 yen would force More people to give up and drive down cigarette sales, central and local government tax revenue is still projected to rise by about 1.5 trillion yen over the approximately 2.2 trillion yen pRedicted for fiscal 2008. An increase to 1,000 yen per pack has been all but nixed after it was felt that this would significantly decrease tax revenue. Japan Tobacco and tobacco farmers and retailers have already denounced any tax increases as a devastating blow to the tobacco industry. The LDP is toying with the idea of sugaring the pill for farmers by using some of the extra revenue to pay for subsidies, but debate on the size of the tax increase -- unavoidable as far as the commission and the Ministry of Finance are concerned -- could last until the end of the year. Proposed uses for the extra revenue include setting funds aside for an increase in the government's contributions to basic pensions that is planned for fiscal 2009.

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