The growing number of smokers switching to heat-not-burn products should reduce tobacco tax revenue by at least JPY 50 billion (EUR 387 million) this year, which is expected to prompt the government to hike duty on the new generation devices, the Japan Times reported.

Tobacco heating sticks marketed by British American Tobacco, Japan Tobacco and Philip Morris International currently are taxed at JPY 34.3 to JPY 206 (based on leaf content) compared with JPY 244.9 for a pack of conventional cigarettes, the Times said, citing a study by Kyodo News and Dai-ichi Life Research Institute.
According to Toshihiro Nagahama, a Dai-ichi Life economist, the disparity in tax is sure to prompt government reform of the tobacco tax, the Times said. Without tax reform, the study estimates the decline in the government’s take from tobacco taxes could widen to JPY 300 billion by 2020. The predicted shortfall is due to a combination of the shift to heating tobacco and a general decline in tobacco use, the Times said.