JT Prepares for 'Unprecedented' Tax Increase

Source from:  Tobacco Reporter 07/20/2010

Japan Tobacco Inc has received approval from the Minister of Finance for its April 28 application to raise the retail prices of its domestic tobacco products in conjunction with a planned tobacco excise tax hike on October 1. "In the Japanese domestic tobacco market, sales volume continues to decrease due to structural factors including aging and declining adult population, as well as increasingly stringent smoking restrictions," the company said in a press note posted on its website. "In addition, cost per pack has been increasing as a reflection of recent sharp increases in raw material costs." "Under these circumstances, JT had been maintaining the quality and price levels through cost reducing efforts." "However, this planned tobacco excise tax hike of ￥3.50 per cigarette is unprecedented whereby we are projecting a sales volume decline that is unparalleled to any of the excise tax increases of the past." "In order to continue providing the quality and services which will satisfy our consumers as we face substantial declines in sales volume, JT has applied for an amendment of its retail prices which exceed the excise tax hike, given our cost reduction efforts alone will be insufficient to absorb the impact." JT gave examples of October price increases that will range from about 37 per cent to nearly 47 per cent. Enditem