Struggling under a heavy burden of debts, Tokyo’s Minato Ward is considering the nation’s first proposal to levy a local tax on tobacco vending machines, sources said Tuesday.
Currently, local tax revenues from cigarette machine sales go to the municipal government where the firm that owns the machine is located. No revenues go to the local government if the machine is owned by a company located in another municipality.
And this has struck Minato Ward as unfair. The number of cigarette machines is up in the ward’s major shopping and commercial districts, like Akasaka and Roppongi, but tobacco tax revenues in the ward have grown little because many of these machines are operated by businesses based outside the ward, the sources said.
The proposed tax — a rate for which has not been determined — would be levied for every vending machine set up by a company that is not located in the ward, they said.
The ward’s new tax scheme is aimed at discouraging outsiders and encouraging local firms to set up more cigarette machines, leading to an increase in local tax revenues from cigarette sales. Revenues from tobacco taxes in Tokyo’s 23 wards were up 12.7 percent in fiscal 1997 from fiscal 1992, but the 4.89 billion yen that Minato Ward collected increased 5.5 percent.
Every 20-cigarette pack is subject to about a 63 yen national tax, a 63 yen local tax and a 16 yen special tax to help pay off the 28 trillion yen debt of the Japanese National Railways, according to a revised tobacco tax law, which took effect in December. “The tobacco tax was meant to bring direct revenues to the location of the sale,” said Takeichi Takashi of the Minato Ward Office’s finance department. “The reality, however, is very different. We would like to use the extra revenue for beautification projects, like increasing the number of cigarette receptacles.”
The proposal is getting attention as a new source of revenue, but faces opposition from the vending machine companies outside the ward. It is also being criticized by other wards who fear its plan would siphon off their tobacco sale revenues.