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In Japan, heated tobacco associated with greater risk of tax hike

Finance Ministry seeks to raise levy before $2bn market grows

Smokers enjoy Japan Tobacco's Ploom Tech heated cigarettes at a shop in Tokyo's Ginza district.

TOKYO -- Cigarette companies are betting that heated-tobacco products will become popular in Japan -- too popular, worry the country's fiscal mandarins, who want to trim their tax advantage before they catch on.

Heat-not-burn products contain tobacco leaf but produce no smoke -- a selling point in a Japanese market where smoking is on the decline amid greater awareness of the health risks. U.S. tobacco giant Philip Morris International got an early mover advantage when it introduced Japan to IQOS in the fall of 2015. British American Tobacco will launch its glo heated cigarette nationwide next month.

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