Japan Mulls Equal Taxes for Cigarettes and THPs

Japan’s government presented a proposal to the executive committee of the Liberal Democratic Party’s Taxation Research Committee to raise taxes on heated-tobacco products, bringing them to the same level as cigarettes, reports Yomiuri. The increased taxes are to be used to help strengthen defense capabilities. The proposal will be included in the ruling party’s tax reform outline expected to be compiled within the week.

Taxes on heated-tobacco products are currently about 30 percent lower than the taxes on combustible cigarettes. Some members of the Liberal Democratic Party as well as cigarette manufacturers have argued that the tax rate difference should remain the same because “heated-tobacco products are less harmful to health.”

The Cabinet approved a tax reform outline last year that stipulates the tobacco tax will increase by “the equivalent of ¥3 ($0.02) per cigarette” as part of the defense tax increase. A tax revenue increase of about ¥200 billion in expected.

“After consulting with Prime Minister Kishida, we have decided not to make a decision this year,” said Yoichi Miyazawa, chairman of the Liberal Democratic Party’s tax committee, regarding the start of the defense tax increase.