The country’s ruling party introduced a proposal to sell the government’s shares in Japan Tobacco, the third-largest tobacco company in the world, to generate funds for rebuilding areas destroyed by massive earthquake and tsunami.

Japan Tobacco dropped 1.8 percent, the largest fall since Sept. 5, in Tokyo. The shares earlier today went up by more than 9 percent. The broader Topix index added 0.7 percent.

The government could generate raise 1.8 trillion yen (nearly $24 billion) if it sells its 50.01 percent stake in the tobacco giant at the current stock price. In addition, privatization could help JT operate will reduced constraints while the officials seek to levy more taxes, including excise tax on cigarettes, to generate funds needed to rebuild eastern part of the country devastated by natural disasters and nuclear catastrophe. “apan Tobacco will be free to make decisions on its own,” admitted Mikihiko Yamato, a researcher from Japan Invest KK. “In case the market grows the shares up, the government could approve sale of its part of shares even earlier than originally planned.”

The government increased tobacco taxes by as much as 40 percent last October, and Japanese Health Minister Yoko Komiyama stated several weeks ago that excise taxes on tobacco would grow further until the average price per pack reaches approximately 700 yen, or 75 percent higher than it is currently, in order to reduce medical expenses. The ruling party as well proposed a 9.2 trillion yen total tax hike last week.

Share-Price Boost

The manufacturer of Winston, Camel and Mild Seven has gone up by 19 percent in 2011 in Tokyo stock, versus 16 percent decrease at the Topix index. Oct 5th was the deadline when investors could acquire shares to be eligible to receive JT’s next payment of approximately 4,000 yen, according to Japan Tobacco spokesperson.

“We hope that Japan Tobacco would be soon a fully privatized company,” the company’s spokesman admitted in a phone call, refusing to give any further comment. Yamamoto had confirmed in September that Japan Tobacco has intentions to buy back a part of shares in case the government decides to sell them.

Japan government promised to spend around 19 trillion yen during the next five years to recover the northeast part of the country after it was hit by devastating earthquake and tsunami, followed by worst nuclear disaster in 25 years at Fukushima. Whereas the government has already adopted two measures with a total cost of about 6 trillion yen, the economy has been falling for almost 9 months.

By Sara Norton, Staff Writer. Copyright © 2011 Cigarette-Store.org. All rights reserved.