Jiji Press TOKYO (Jiji Press) — Some Japanese government and ruling camp officials have proposed a tobacco tax increase of ¥3 per cigarette over several years beginning in October 2018, informed sources said Wednesday.
The plan has emerged as part of discussions on tax system reform for fiscal 2018, which starts next April.
With the tobacco tax hike, the officials aim to cover an expected revenue drop from an envisaged program to apply a reduced tax rate to some items when the consumption tax is raised from the current 8 percent to 10 percent in October 2019.
But the government is likely to face difficulties winning support for the plan as many in the ruling Liberal Democratic Party strongly oppose a tobacco tax hike, the sources said.
Since the tobacco tax was raised by ¥3.5 per cigarette in October 2010, Japan has collected ¥12.2 apiece in tax.
A tobacco tax hike of ¥3 is seen boosting government tax revenue by several hundred billion yen annually.
The officials are considering an idea of raising the tobacco tax by one yen per cigarette in October 2018, while skipping any hike in October 2019, when the consumption tax is scheduled to increase, the sources said.
They are also calling for raising the tobacco tax by one yen in both 2020 and 2021.
Some LDP officials believe that the tobacco tax should be raised by ¥3 in a single increase.
But many LDP members are negative about a tobacco tax hike, due to consideration for smokers and tobacco farmers, the sources said.
At an informal meeting on Tuesday of senior officials of the LDP’s Research Commission on the Tax System, many participants were cautious about raising the tobacco tax.
The LDP commission plans to start discussions on the fiscal 2018 tax system reform package on Nov. 22, for expected compilation in mid-December.