Japan imposes hefty tax hike on cigarettes

By ASSOCIATED PRESS
October 1, 2010 09:49

 
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TOKYO — Japan imposed a record 40 percent tax hike on cigarettes in a bid to curb the nation's smoking rate — the highest among major industrialized nations.

The hike, effective from Friday, will raise the price of Japan's most popular brand, Mild Seven, by a third to 410 yen ($4.93) a pack, bringing it closer to prices in the US.

"The aim is to encourage smokers to quit. We hope the price increase will discourage smokers from buying cigarettes and eventually help them quit smoking," said health ministry official Kosuke Kato. Per cigarette, the tax rose to 12.244 yen (14.7 cents) from 8.744 yen.

The price hike is expected to raise 63.1 billion yen ($756 million) in taxes over the first year, but government officials said the main purpose was to promote health, not raise revenues.

"We want to encourage healthy lifestyles. The purpose of the hike is not to raise government revenue," said Koji Motozuka, a finance ministry official.

Japan Tobacco Inc., the world's third-largest tobacco company, expects the number of cigarettes smoked to drop by a quarter because of the hike.

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