Tax hike on heat-not-burn tobacco products under consideration as LDP begins review of tax reforms


The ruling Liberal Democratic Party will consider raising the tax rate on heat-not-burn tobacco products under a review of the current tax system for the year starting next April, according to its tax panel chief.

“We would have to make a decision by the end of the year,” Yoichi Miyazawa, who heads the LDP’s tax panel, said in an interview.

The government imposes lower tax rates on heat-not-burn tobacco products than on conventional cigarettes. Heat-not-burn tobacco products have gained popularity as manufacturers claim that emit fewer harmful toxins than conventional cigarettes.

Proposed tax reforms are normally drawn up before year-end, in time for the government to compile a state budget for the next fiscal year.

The government is expected to decide how to fund a proposal to make education from preschool through university effectively tuition-free, but Miyazawa has taken a cautious stance about changing the tax system.

Regarding income tax reform, the ruling coalition of the LDP and Komeito party agreed last year to work in stages, after raising the income threshold for the spousal tax deduction system to encourage greater workforce participation by women.

Miyazawa said debate on the issue “needs to proceed quite carefully, requiring considerable attention politically,” taking into account expected opposition from high-income households, which would face increased tax payments.

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