JT , farmers, stores' groups voice opposition to tobacco tax hike

TOKYO, July 2 Kyodo - Japan Tobacco Inc. and organizations representing tobacco farmers and stores on Tuesday jointly voiced opposition to a possible tobacco tax hike, arguing that higher tobacco prices would dampen consumption and not lead to increased tax
revenue.

The move by tobacco maker JT, the Japan Tobacconist Federation and the Japan
Tobacco Growers Association came after a group of lawmakers suggested that
cigarette prices be raised to 1,000 yen per pack from the current price of
about 300 yen instead of increasing the consumption tax rate, to help cover
ballooning social security costs.

JT Executive Deputy President Ryoichi Yamada said at a news conference that
tobacco sales have been declining since a hike in tobacco tax in 1998 and that
falling sales have accelerated lately partly due to subsequent tax rises and
the introduction of tighter smoking rules.

''If the tax is hiked as it is proposed now, the impact on sales would be
immeasurable,'' Yamada said. He added that given an expected slump in tobacco
sales in the case of a sharp tax hike, the government would not be able to
raise tobacco tax revenues as much as it anticipates.

Shigeru Matsui, chairman of the JTF, a tobacco stores' association, told the
same news conference that most tobacco stores are operated by elderly people on
a very small margin. ''I am really concerned that if a tax hike is imposed,
there may be no tobacco shops in towns.''

Tsugiyuki Saisho, the head of the JTGA, an association representing about
13,000 tobacco farmers, also expressed strong concern. He said a higher tax
would have ''a fatal impact'' on farmers and lead to less land for tobacco
farming in Japan.

Earlier in the day, the three handed a statement expressing opposition to any
increase in tobacco tax to Sadakazu Tanigaki, policy chief of the ruling
Liberal Democratic Party.==Kyodo