Tobacco taxes in Japan should be raised until the average price for a pack of cigarettes is about 700 yen, or 75 percent more than the present level, to cut medical costs, Health MinisterYoko Komiyama said.
The ministry, which is participating in a tax panel session, will push for increasing tobacco levies by 100 yen annually for three years, Komiyama said. Most of the members of the panel agreed with the idea last year, she said.
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Efforts to raise duties have been complicated by government ownership of a controlling stake in Japan Tobacco Inc. (2914), the world's third-biggest publicly traded cigarette maker, and concerns that tax revenue may decline for the country facing the world's largest public debt. Smoking was responsible for at least 4.3 trillion yen in medical costs and economic losses for Japan in 2005, according to a study by Institute for Health Economics and Policy.
"At that level, we can expect people who want to quit smoking to stop, while maintaining the level of tax revenue," said Komiyama, 63, who became minister on Sept. 2. "It's also the best way to prevent underage smoking."
Almost 10 percent of the population under 20 years old had smoked at least once, with 1.2 percent of the age group smoking every day, according to a study funded by the health ministry in 2007.
Japan Tobacco Stake
The tax panel, led by Finance Minister Jun Azumi, proposes reducing the government's stake in Japan Tobacco to a third from about half, he said on Sept. 16.
The maker of Mild Seven and Camel cigarettes has gained 21 percent this year in Tokyo trading, giving it a market value of 3.7 trillion yen ($48 billion).
The average price for a pack of 20 cigarettes in Japan went up by 33 percent in October last year to 400 yen, or about $5.20. That compares with the average price of $10.80 in New York City, when the city raised taxes in July last year.
The proposal to increase taxes is in accordance with the manifesto of the ruling Democratic Party of Japan, Komiyama said. The manifesto calls for abolishing a law that requires the government to own more than half of Japan Tobacco's outstanding shares, and that tobacco-related issues be included in the "health agenda," she said.
Japan Tobacco rose 4.6 percent to 365,000 yen in Tokyo trading today. The cigarette maker said on Sept. 6 it wants the government to sell its shares and use the funds to finance reconstruction after the March 11 earthquake and tsunami that left more than 20,000 people dead or missing.
Children's Fund
The Children's Investment Fund Management UK LLP, the London hedge fund founded by Christopher Cooper-Hohn, has been lobbying for Japan Tobacco to buy back at least 17 percent of its stock and raise dividends.
The volume of cigarette sales fell about 20 percent since the tax was added in October and further price increases will accelerate the decline, Japan Tobacco has said.
Central and regional governments raise about 2 trillion yen in tax revenue each year from tobacco, according to the finance ministry.
One of every four adults in Japan smoked in 2009 according to Japan Tobacco, down from one in three in 2000.
In the U.S., one out of every five adults smoke cigarettes, according to the Centers for Disease Control and Prevention. Smoking was estimated to be responsible for $193 billion in annual health-related economic losses in the U.S. between 2000 and 2004, according to the CDC.
How She Started
Tobacco-related illnesses comprise one of the biggest public health threats the world has faced and kill almost six million people yearly, of which 600,000 are non-smokers, according to the World Health Organization. Almost 80 percent of the world's 1 billion smokers live in low- and middle-income countries, the Geneva-based agency said on its website.
Japan's health ministry will also submit legislation at the session that requires businesses to ban or separate smoking sections, Komiyama said. The ministry will probably give exceptions for restaurants and hotels for a few years and also subsidize the purchase of ventilation equipment, she said.
"It may be extreme to say this, but I'm not stopping people from shortening their lives themselves," said Komiyama. "But I don't want to let them cause trouble for others."
Komiyama began advocating anti-smoking measures when she became a lawmaker in 1998 and found other legislators smoked in the parliament buildings and at meetings. She said she had been careful about protecting her throat when she worked as an anchorwoman for public broadcaster NHK for more than 20 years.
"I walked around with a sign that said 'no smoking at my table' to every meeting I attended," said Komiyama. "Then many lawmakers who didn't enjoy the smoke began sitting near me. That's how this started." Enditem
