Why do cigarettes continue to be raised in Japan?

Cigarette prices have been raised frequently.

For instance, between 2003 to 2021, the cost of a pack of Mobius increased by more than twice as much in less than 20 years.

Even though it is a luxury item, it is hard to find a product that has undergone such a dramatic price increase.

So why on earth do cigarettes continue to increase in price?

First, we speculated on the background behind the price increase of cigarettes.

The Reason for Cigarette Price Increases is the Revision of Taxes

The main reason for cigarette price hikes is an increase in tobacco taxes.

Cigarettes are subject to four types of taxes: a national tobacco tax of 23.5%, a special tobacco tax of 2.8%, a local tobacco tax of 26.3%, and a consumption tax of 9.1%.

Along with these increases in taxes on cigarettes, the price of cigarettes has been rising steadily.

However, recent trends suggest that the price increase is not the sole cause of the cigarette tax hike.

It is also possible that the price of cigarettes is rising due to corporate interests.

Why are cigarette taxes so high?

There are three main reasons why tobacco taxes are so high.

1. To secure tax revenue
2. To cover medical expenses
3. Because tobacco taxes are easy to increase.

Let’s take a look at each of these reasons.

To secure tax revenue

In recent years, the number of smokers has declined due to increased health awareness.

Naturally, the amount of tax revenue that can be collected will decrease if the tax rate remains the same.

In response to this situation, a policy to secure the same tax revenue level from fewer smokers is being proposed by raising the tax rate.

The stronger this trend toward higher taxes becomes, the more the number of smokers will decrease.

The higher the price of cigarettes, the more taxes will be raised.

To cover medical expenses

Smoking increases the risk of health problems.

When smokers become ill, health insurance, which covers medical expenses, is funded by taxes.

It is only natural that smokers, who are at higher risk of health problems, need to collect more taxes to cover their medical expenses.

In recent years, the number of smokers has decreased as the price of cigarettes has risen, and taxes have been increased to reduce medical costs.

Because tobacco taxes are easy to increase

As the population of smokers’ declines, the percentage of smokers among the electorate will also decline.

As a result, even if taxes on cigarettes are increased, only a small percentage of smokers will complain, and it is even said that tobacco taxes are the easiest tax to rise from the standpoint of politicians.

In this day and age, when securing tax revenues is a problem due to the declining birthrate and aging population, the tobacco tax is a quick and easy way to raise taxes.