Possible Tax Hike On The Horizon For Heat-Not-Burn Products In Japan

In Japan, a country where heat-not-burn products have increased dramatically in popularity since their inception, the country’s Ministry of Finance reportedly has plans to impose a dramatic tax hike on heat-not-burn (HNB) products that could hamper the industry’s growth in the country.

Japan has, since HNB products were first introduced into their market, been what some have referred to as a fertile testing ground for HNB products due to its restrictions against nicotine infused liquids and its population’s fascination with gizmos and gadgets. As a result of its government imposed e-liquid regulations, electronic cigarettes have been unable to gain a foothold in the country, which has left open an opportunity for HNB products that companies such as Philip Morris International, British American Tobacco, and Japan Tobacco have been quick to fill – Philip Morris being the first with its HNB product the iQOS, which was launched near the end of 2014.

But now, in light of the possibility of a hefty tax increase on HNB products, the rapidly rising industry could falter, if not only slightly, as it continues to grow.

Street Insider reports that the Japanese Ministry of Finance’s plans to increase taxes on HNB products will be considerable — 80 percent more than the taxes already imposed on conventional cigarettes in the country.

According to Trefis, this significant tax hike on heat-not-burn products could hamper the industry’s impressive growth rates as it carves into the current tax advantages enjoyed by HNB products.

HNB products, like electronic cigarettes, heat their blends to the point at which vaporization occurs. At higher temperatures, combustion occurs, which is exactly what happens when someone lights up a conventional cigarette. Some believe HNB devices to be less harmful than traditional cigarettes, which is in part why they’ve skyrocketed in popularity in Japan and elsewhere around the world.

One recently published study has found HNB products to likely be safer than cigarettes.