Japan Tobacco Rises After Report on Cigarette Taxes
Japan Tobacco Inc. rose the most in a year in Tokyo trading after the Mainichi newspaper reported the nation’s cigarette tax may be increased less than the amount sought by the Health Ministry.
The shares surged 9.7 percent, the most since October last year, to close at 282,200 on the Tokyo stock exchange. Before today, the stock had slumped 12 percent since the Democratic Party of Japan took office on Sept. 16 with a pledge to increase tobacco tax to discourage smoking.
The tax may increase as much as 3 yen a cigarette starting April next year, less than the 10 yen proposed by the Health Ministry, the Mainichi reported, without saying where it obtained the information.
“Investors are relieved that the tax increase may be smaller than expected,” Shigeo Kikuchi, an equity manager at Tokyo-based Takagi Securities Co., said. “There was concern that taxes could be increased to similar levels as those in Europe.”
The average price of a pack of 20 cigarettes in Japan is 300 yen ($3.42), nearly a third the price charged in the U.K.
Japan Tobacco remains opposed to any tax increase, Tokyo- based spokesman Kazunori Hayashi said, declining to comment on the Mainichi report.
The government is unlikely to raise tobacco tax by a “large amount,” Shu Watanabe, a Democratic Party of Japan lawmaker who sits on the government’s tax panel, told reporters in Tokyo. He said he wasn’t familiar with the Mainichi report.
“We’ve come to the conclusion that it wouldn’t be possible to quickly raise the tax by a large amount, say a few hundred yen” per box, Watanabe, who is also a vice minister of internal affairs, said.
Smoking Rate
The health ministry estimates the smoking rate among men may fall to as low as 27.1 percent if the price is raised to 500 yen. The country gets about 1 trillion yen ($11 billion) in tax revenue each year from tobacco.
The smoking rate among men in Japan dropped to 36.8 percent in 2008 from 46.8 percent in 2003, according to the health ministry. About 9.1 percent of women smoked last year, compared with 11.3 percent in 2003.
Japan’s government owns 50.01 percent of the maker of Benson & Hedges and Mild Seven cigarettes.
By Junko Hayashi
December 3, 2009 Bloomberg
Tags: Japan Tobacco
