Shizuka Kamei, policy chief of the ruling Liberal Democratic Party, recently proposed a raise in the tobacco tax in the fiscal 2000 government budget. The proposal, however, was quickly quashed due to opposition in the LDP and by Japan Tobacco Inc., the nation’s only cigarette manufacturer. Smokers and nonsmokers alike were dumbfounded by the political farce.
Opponents said the proposal, which they claimed was made without consulting interested parties, would hurt the Japanese tobacco industry. Kamei said the raise was intended to cover the government’s revenue shortfall. Let me point out that higher tobacco taxes worldwide are intended to protect public health, and not to increase government revenues.
Kamei’s proposal was an important step in the fight to tighten Japan’s controls on smoking, which lag far behind those in other industrial countries and in our Asian neighbors, too. Some politicians without foresight opposed the proposal to curry favor with voters as a general election approaches. It is dismaying that many Japanese politicians argue that the tobacco tax should not be raised, on the grounds that it affects a huge number of consumers.
In the Meiji Era, Japan enacted a law, ahead of other nations, to ban smoking by minors. Lawmakers in those times had the foresight to protect the health of youngsters. Their successors, however, showed little interest in the harmful effects of smoking on youth and the general public. The now-defunct United Social Democratic Party, in its campaign platform for a 1992 Upper House election, pledged to create a society in which smokers and nonsmokers are segregated. The only campaign pledge on smoking controls ever made by Japanese political party failed to materialize.
There are half a million cigarette vending machines nationwide, which are accessible by adults and minors alike. The law banning smoking by minors has no effect. The only way to give teeth to the law is to ban cigarette vending machines, but the government has taken no action in this direction.
Western countries have raised tobacco taxes to discourage minors from smoking. A pack of cigarettes sells for the equivalent of about 600 yen in European countries, compared with less than 300 yen in Japan. Japanese cigarette prices could be raised by a higher tax, which could be held within a reasonable range.
In the U.S., cigarettes are relatively inexpensive, as a result of low cigarette taxes. Tobacco companies, however, have been forced to accept huge out-of-court settlements with state authorities that have sought compensation for the treatment of smoking-related diseases. The companies have increased prices to raise funds for these settlements.
JT, which is 70 percent owned by the government, should follow government policy. An interim report on public-health policy, issued by the Health and Welfare Ministry, says Japan seeks to halve the number of smokers by 2010, noting that smoking-related health problems are increasing. Rasing in the tobacco tax should help Japan achieve that goal.
JT’s stock price has nosedived recently. The fall stems from the chaos over the proposed tobacco tax increase and the slumping business of the new international tobacco division that JT purchased from the U.S. conglomerate RJR Nabisco Holdings Corp. last May.
U.S. tobacco manufacturers have been trying to phase out their tobacco business in the face of tighter controls on smoking and the number of damage suits filed against them. The European Union seeks to ban all tobacco advertising by 2006. The outlook for the tobacco market is gloomy worldwide.
In these circumstances, Japanese stock investors have been wary of JT’s moves to expand its tobacco business. I have serious doubts about JT’s management strategy, one that bucks the global trend toward tighter controls on smoking.
Seven plaintiffs, including lung-cancer patients, have filed a class-action suit with the Tokyo District Court against JT to seek damages for their health problems. The court’s judgment could be influenced by historic out-of-court settlements in the U.S., which would deal a severe blow to JT.
The top U.S. tobacco manufacturer, Philip Morris Co., last October launched a campaign on its Internet site and in television spots to admit that medical evidence points to smoking as a cause of lung cancer, heart trouble and other lethal diseases.
JT’s contention that a higher tax would dampen sales is meaningless given medical evidence showing that tobacco damages human health. JT executives should realize that most Japanese want the company to diversify into nontobacco markets to restructure, instead of resisting a rise in the tobacco tax.
Some people have used the phrase “nonsmoking fascists” to criticize antismoking campaigns of the Health and Welfare Ministry and nongovernmental organizations. This is outrageous. Japan has fallen far behind other industrial nations in banning cigarette companies’ television ads and smoking on airplanes.
Although the World Health Organization last year started compiling a treaty to restrict smoking, the Japanese government and the Diet are unenthusiastic about controls on smoking. The term “antismoking fascists” reflects total ignorance of tighter international restrictions on smoking.
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