Japanese Brewers Lobby Over Tax Hikes

by Mary Swire, Tax-News.com, Hong Kong

05 December 2002

The Financial Times reported on Wednesday that Japan's four largest breweries, together with market leader Japan Tobacco are lobbying against plans to increase taxes on cigarettes and happoshu, a low malt beer.

The Japanese government has threatened to increase the taxes in order to compensate for economy-stimulating tax cuts elsewhere.

This is the third time that it has endeavoured to do this, and although lobbying from the breweries and tobacco companies has been successful in preventing tax hikes in the past, according to the FT, the companies are bracing for defeat this time.

The Kirin, Asahi, Sapporo and Suntory breweries have protested against LDP plans to put happoshu in the same tax category as beer, arguing that Japan's beer taxes are high enough already, at between three and eighteen times higher than those levied in European countries.

Speaking to the FT this week, JP Morgan analyst, Yoko Fujii warned that any increase in the tax on happoshu will almost certainly result in a loss of sales for the breweries, as consumers are likely to switch to other low-priced drinks.

However, Japan Tobacco - with its 73% market share - is in a better position to deal with tax increases, as it is better able to pass the increased cost directly on to consumers.

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