While political interest is building to escalate the tax bar on tobacco products, Japan Tobacco Inc has indicated to increase prices.

It was being reported that shares of the world's third-biggest publicly traded cigarette maker moved up to 368,000 yen, a 5.4% increase since October 2008. There is no doubt that smoking pushes medical expenditure, and perhaps that's the reason that taxes are being proposed to move up by the government. However, government's stake in Japan Tobacco has halted the progress of the proposal.

"If the price is over 500 yen, it will damage the sales of tobacco, but cigarette companies can still raise profit when their price increases reflect the higher costs", said Mikihiko Yamato, a research partner at Japan Invest KK.

Government's intention was being confirmed by Health Minister Yoko Komiyama, as he claimed that the health ministry is mulling to rack up tobacco tax by 10 yen on year to year basis for the next three years.

As expected, the proposal got an approval from a majority of a tax panel members, thereby reinforcing the belief that implementation of this step would help in addressing the percolating concern of smoking in teens.

While government would be pondering to sale its stake in Japan Tobacco, it would be worth watching how the government combats with Japan Tobacco over the latter's decision to raise the prices which could hamper tobacco sale.