The average price of a pack of cigarettes should be raised to about JPY 700 (EUR 6.70), which would be 75 per cent higher than the current level, to cut medical costs, reports Bloomberg Businessweek.
The health ministry, which is participating in a tax panel session, will push for increasing tobacco levies by JPY 100 annually for three years, Komiyama said.
The tax panel, led by Finance Minister Jun Azumi, also proposed reducing the government’s stake in Japan Tobacco to a third from over about half. The reduction would require the abolition of a law which stipulates that the government own more than half of Japan Tobacco’s outstanding shares.
While analysts reacted positively to the proposal of tax increases, arguing that they will lead to profit growth at Japan Tobacco, Japan Tobacco Executive Deputy President Masakazu Shimizu told reporters that Japan should be cautious about raising cigarette taxes and should not count on tobacco as a major source of revenue.
The tax panel was appointed by Prime Minister Yoshihiko Noda’s new government to propose options for funding reconstruction in the earthquake and tsunami-hit north-east of Japan. (pi)