Third-class cigarettes losing ‘preferential’ tax status

Japan Tobacco Inc said today that it had applied to the Minister of Finance for approval to increase the retail prices of all of its 35 Mevius-brand cigarettes and those of six former third-class cigarettes, which are due to lose their preferential tax status.

If approved, the price increases would take effect on April 1.

The changes would see the prices of each of the company’s Mevius products increase from ¥430 per pack of 20 to ¥440 per pack.

Among the former third-class cigarettes: Wakaba and Uruma prices would rise from ¥260 per pack of 20 to ¥290 per pack; Echo, Violet and Shinsei prices would rise from ¥250 per pack of 20 to ¥280 per pack; and the price of Golden Bat would go from ¥210 per pack of 20 to ¥260 per pack.

‘Following revision of the tobacco tax law under the FY2015 tax reform, the preferential tax treatment for former third class cigarettes will be abolished as of April, 2016, and the tax rate for the cigarettes will be increased in stages until April 1, 2019,’ JT said in a note posted on its website.

‘As the tax for the cigarettes will be raised by ¥1 per stick on April 1, 2016 based on the revision, JT has decided to apply for amendment of retail prices of the cigarettes. ‘Retail prices that the company has proposed in this application reflect the amount of the tax rate increase as well as expected impact on demand.

‘JT plans to amend retail prices of the former third class cigarettes in stages each time the scheduled tax rate hike is conducted. Retail prices of the cigarettes will be considered carefully, taking into account the market situation.’