Japan Tobacco International to Increase Cigarette Prices by 75%

Japan Tobacco International is the world’s third largest cigarette manufacture, lifting its position in almost three years due to speculation it can raise prices more than the tax increases advised by the health minister.

Japan Tobacco drove 6% to 370,000 yen, the highest intraday level since October 2008. Tobacco taxes in Japan have to be increased until the mean price of a package of cigarettes will constitute 700 yen ($9.15), or 75% higher than the present level, in order to reduce medical costs, Health MinisterYoko Komiyama stated in an interview.

“Tax increases will bring to Japan Tobacco’s revenue growth. If the price will be over 500 yen, it will affect the sales of tobacco, but tobacco companies can still increase revenue when their price growth reflects the higher costs, stated Mikihiko Yamato, a research partner at Japan Invest KK.

The ministry will try to increase tobacco taxes by 100 yen annually for three years.

“At that level, we can hope some people will have the desire to stop smoking, while maintaining the level of tax revenue. I think that it is also the best way to prevent smoking among teenagers,” said Komiyama.

Approximately 10% of Japanese under 20 had lighted up at least once, with 1.2% of them smoking every day, according to a statistics sponsored by the health ministry in 2007.

Attempt to increase taxes have been impeded by government possession of a controlling stake in Japan Tobacco and worries that tax revenue may drop for a country facing the world’s largest public debt.

The tax panel conducted by the Finance Minister Jun Azumi, advises dropping the government’s stake in Japan Tobacco to a third from about half. The manufacturer of Camel and Winston cigarettes has obtained 23% this year in Tokyo trading, valuing at market at 3.7 trillion yen, or $48 billion.

“It is evident that the government will sell a particular amount of Japan Tobacco shares, which will simplify the way company is doing business,” Japan Invest KK’s Yamato said.

The mean price of a package of 20 cigarette raised by 33% last October to 400 yen, or about $5.20. For instance in New York City the average price is $10.80.

Japan Tobacco analysts predict an 11% increase in revenue this fiscal year after raising prices in Russia and other tobacco markets.

The volume of cigarette sales dropped after a tax increase in October lifted prices, according to Japan Tobacco.

The plan to raise taxes comes after the manifesto of the acting Democratic Party of Japan, Komiyama stated. The given manifesto requires canceling the law that the government owns more than half of Japan Tobacco’s shares and states all tobacco-related issues should be added in the health agenda.

Hypocritical Altria threatens Indian Tribes’ Economy

Altria, the owner of leading tobacco maker Philip Morris is sponsoring an offensive advertisement campaign targeting the Indian Tribal smoke shops and calling on the NY State to tax tobacco sold in reservations.

Indian tribal leaders complain the campaign is another move to oblige them to levy taxes on their products, demolishing their business – a plan that would strengthen Philip Morris’ leadership in nationwide tobacco market.

The ads funded by the tobacco giant appeared in all major newspapers across the New York State in the beginning of April.

“Albany Lets Billions Slip through Its Fingers. Tax Dollars We Need for Vital Services Go Uncollected,” one of the adverts states, ignoring the fact that Indians pay federal taxes, as well as other U.S citizens.
The campaign plays on the concerns of NYS residents regarding the unbelievable $9.2 billion deficit in the budget.

James Ransom, St. Regis Mohawk Indian Nation co-chairman, states that the ad campaign is not an act of altruism from Philip Morris, but a pure hypocrisy, as they are eager to destroy competition from Indian tribes and increase their own cigarette sales.

The same Philip Morris that did their best to encourage and promote sales of their products by signing contracts and giving discounts to Indian smoke shops, has now attempting to eliminate Indian retailers from the fading U.S tobacco market, said Ransom.

“Now Philip Morris demonstrates shocking disregard for Indian retailers who assisted them in creating the market dominance they achieved today, so they don’t need us anymore, and thus, they are willing to eliminate us and boost their presence in the market even more,” stated Mr. Ransom.

The aggressive advertisements have made Indian retailers raging with anger.

“If I could, I would stop selling Marlboros in my shop. I can’t stand people, attempting to crack down our business,” admitted Patti Snow, an owner of smoke shop in Seneca Nation reservation.

According to Snow, Philip Morris was evidently trying to put an end to the loss of market share to low-cost Indian-made cigarettes, hugely popular among adult smokers.

Indian-made cigarette are selling for much less than the tobacco products made by Philip Morris products. For instance, a carton of Marlboros is selling $65 whereas Native American Niagara cigarettes are selling for $32 per carton.

The Native American tobacco industry that pays millions of dollars annual directly to the general economy or through opening industry-related jobs, is currently in huge jeopardy.

On April 1st, President Barack Obama signed into law the Prevent All Cigarette Trafficking (PACT) Act that prohibits the U.S. Postal Services to ship cigarettes purchased thorough the Internet, a niche occupied by Indian Nations and especially popular among American smokers since the 1990s.

“The Representatives of Philip Morris ensured us they would be neutral in the issue concerning the taxation of Indian-made cigarettes. Then two weeks ago, totally unexpectedly and even without notifying us about their potential attack, they publish these atrocious ads, literally naming us as criminals, despite namely Philip Morris helped us to establish our business,” Ransom said.

College students still smoke

Ashton Jordan began puffing at the tender age of 14. He initially sneaked his first cigarettes from his uncle and smoked in front of friends to look cool, however at 16 he already became a chain-smoker.

Now being a sophomore at mechanical engineering at the University of North Carolina, Jordan admits he uses to smoke sometimes while being in smoking environment, although he gave up smoking regularly.

Despite being aware of all health complications related to smoking, Jordan still lights up form time to time. He also says that all smoking bans and policies violate smokers’ rights and freedoms, since it was their voluntary decision to start smoking and therefore people should quit only if they want to, without any external pressure.

Student Smoking statistics

As it was mentioned before, students keep lighting up, despite being aware about all tobacco-related health complications. “Smoking is an essential part of my life, it wakes me up, helps in relaxing after lessons and if my friends around me want to smoke, I’ll definitely join them,” admitted Janine Spenser, a junior communications major at UNC. According to a survey of 200 North Carolina University students, 30 percent of them confirmed that they light up at least one cigarette a month, if not more often.

American Lung Association’s North Carolina Department declared that 31 percent of North Carolina students smoke. These numbers are decreasing in comparison to previous years however they are higher than averages across the nation.

Results of American Lung Association report the number of college students who used to smoke dropped by a half: from 30.5 percent in 2000 to 19.2 percent in 2006, making it a lowest level since 1980.

Campus smoking bans

Another thing that impacted heavily on the drop of smoking in colleges is the strict bans on smoking on campuses.

This policy becomes even more widespread each day since many universities throughout the country are implementing smoke-free policies on campuses. In accordance with Tobacco-free Kids survey, 16 campuses of the University of North Carolina and 14 other colleges located in the State of North Carolina have imposed on-campus smoking bans.

The UNC student handbook underlines that their facilities including campuses have been declared smoke-free areas, and smoking is allowed at the distance of at least 30 feet from the facilities.

Students believe that on-campus smoking bans violate their right to smoke. “While being outside you can move away from smoke,” Abbey Thomas, a hospitality student stated. “However, they do not let us smoke indoors and now they want to prohibit smoking outdoors on college territory, so we have just one single question – where can we smoke now?” complained Thomas. “It is not right of the college principals to dictate us what to do and what not to do.” It will only encourage students to rebel and break the rules. Limiting smoking to specific places is the best solution to me,”

The price increase

The main issue for every current smoker is the continuous increase in the price of cigarettes. Those recent increases put smokers in a very difficult situation, since the cost of lighting up has flown to the moon, getting to larger-than-life $10 per pack in New York and Rhode Island.

The prices back in North Carolina would as well go even higher in case the Gov. Bev Purdue proposal of $1 state tax increase would be approved by State Government. The proposal comes on the heels of the 156-percent increase in the Federal Cigarette tax that came into force on April 1, making it jump from 39 cents to $1.01 per pack. And don’t forget about those increases that were implemented by cigarette manufacturers in anticipation of sales declines starting from April.

Therefore, unbearable prices have already scared many students away from buying cigarettes, or simply make them switch to less expensive brands settle. Abbey Thomas, for instance, smoked Pall Malls but switched to DTCs just because they are not so expensive.

Ashton Jordan said that students are more likely to give up smoking because of high prices than other issues. He admitted that financial damage hurts students more than future health complications. Students would certainly give up if prices continue to rise, simply because they could not afford cigarettes any more.

The growing hookah popularity

There is one trend that has seen a dramatic growth in popularity among student communities across the nation. This is the hookah use. A hookah, largely popular in Arabic world is a pipe filled with water at the bottom and a special sort of flavored tobacco at the top. As a user inhales via hookah’s hose, the tobacco burns from the heated coals and the smoke is passed down through the pipe, and delivered to the user.

The major advantage of hookah is the possibility to use it simultaneously by many people. It helps to create a unique feeling of community between users that is very important in case of students. Moreover, according to psychologists, many smokers name being part of a smoking environment as the main reason to start smoking too, and a hookah pipe is the best thing to create such an environment.