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Cigarette Prices Should Rise 75%, Japan’s Health Minister Says

Japan’s Health Minister Yoko Komiyama

Japan's Health Minister Yoko Komiyama

Akio Kon/Bloomberg

Yoko Komiyama, Japan’s health, labor and welfare minister.

Japan’s Health Minister Yoko Komiyama

Japan's Health Minister Yoko Komiyama

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.

Efforts to raise duties have been complicated by government ownership of a controlling stake inJapan 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 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 Partyof 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.

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 16 percent this year in Tokyo trading, giving it a market value of 3.5 trillion yen ($45.5 billion). Japan Tobacco 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.

Japan Tobacco rose 2 percent to 349,000 yen on Sept. 16. Markets in Japan were closed yesterday for a public holiday.

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