Japan Considers Increasing Heated Tobacco Tax to Fund Defense

According to a report by the Nikkei newspaper on December 13, the Japanese government and ruling party are considering raising taxes on heated tobacco in order to generate funds for strengthening national defense capabilities.

The Japanese government plans to raise the tax burden on heated tobacco products to the same level as traditional cigarettes. Currently, the tax on heated tobacco products in Japan is 10-30% lower than that on traditional tobacco.

According to a statement from the Japanese government made during yesterday's ruling party tax committee meeting:

In order to address the disparity in taxation between heated tobacco and traditional cigarettes, they plan to increase revenue through a revised tax regime to make up for the shortfall in defense expenditure.

Cigarette manufacturers and some members of the Liberal Democratic Party are urging to maintain tax rate disparities, arguing that "heated tobacco products pose less harm to health.

In December 2022, the Japanese government revised three security agreements and announced plans to raise approximately 43 trillion yen over the next five years for defense expenditures. This plan aims to compensate for the anticipated significant increase in defense spending by raising corporate income taxes and tobacco taxes.