Japan Considers Increasing Heated Tobacco Tax to Fund Defense

The Japanese government and ruling party are considering raising the tax on heated tobacco to fund national defense capabilities. The tax on heated tobacco products is currently 10-30% lower than traditional cigarettes in Japan. The government plans to increase revenue through a revised tax regime to compensate 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 health risks. 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 increase in defense spending by raising corporate income taxes and tobacco taxes.