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TOKYO — Japan, long known for its smoker-friendly policies, is debating a substantial tax increase that could bring Tokyo in line with the U.S. and Europe.

The ruling Liberal Democratic Party’s annual tax commission is expected to review a proposal by key lawmakers that could more than triple the retail price of a pack of cigarettes to about $10.

The backers of the higher tax are looking at the additional revenue as a way to cut Japan’s ballooning budget deficit without taking the deeply unpopular move of raising its consumption tax.

Japan Tobacco Inc., which has a virtual monopoly on cigarettes here and is 50% owned by the government, argues that more-expensive cigarettes would depress sales and lead to lower tax revenue. The company, the world’s third-largest tobacco maker by volume after Altria Group Inc. and British American Tobacco PLC, on Tuesday sent executives to lobby the LDP against an increase.

"The government can’t hope for increased tax revenue, because such a big raise in the tax would mean consumption plummets," JT Deputy President Ryoichi Yamada said afterwards. "It’s unfair that smokers should have to bear the burden" of poor government finances.

Japan needs to boost government revenue to pay for pensions for its rapidly aging population. Government debt was 849 trillion yen ($8 trillion) at the end of March, equal to more than 160% of the country’s gross domestic product. One measure put forward to meet the shortfall is raising the 5% consumption tax. But consumers are sure to oppose that, and Prime Minister Yasuo Fukuda, already suffering from low approval ratings, has been reluctant to push the idea.

Many in Japan’s ruling party see higher tobacco tax as a promising alternative. In mid-June, about 45 lawmakers formed a bipartisan league to argue the case for higher taxes. One of its main advocates is LDP heavyweight Hidenao Nakagawa, former chief cabinet secretary and an opponent of raising the consumption tax.

The price of a cigarette pack in Japan is among the lowest in the industrialized world. On average, a pack costs about 300 yen, of which roughly 60% is tax. That is less than half of what a pack costs in New York and less than a third of what it costs in the United Kingdom.

These lawmakers argue that raising the cigarette tax would boost Japan’s tax revenue from the product, which was around 2.2 trillion yen for the year ended March 2008. If cigarette consumption remains unchanged, charging 1,000 yen a pack would increase cigarette-tax revenue by 8.5 trillion yen a year, according to Barclays Capital. But surveys show that as many as three-quarters of smokers say they would try to quit if cigarettes cost 1,000 yen a pack, though it’s unclear how many would succeed.

Health proponents, including the country’s physicians and Health Ministry, say an increase in cigarette taxes would cut down on health-care costs. Japan has one of the highest smoking rates in the industrialized world, at around 40% for men and 10% for women. Lung cancer is a leading killer among men.

STEPHENS CITY — A pack of smokes will cost 25 cents more in town when a new tax adopted Tuesday takes effect.

The Town Council voted 6-1 at its regular meeting to approved an ordinance creating a 25-cent excise tax on a pack of 20 cigarettes. Mayor Ray Ewing, Vice Mayor Joy Shull and councilmen Ronald Bowers, John Hollis, Lindel Fravel Jr. and Micheal Grim voted to approve the ordinance on the final reading. Councilman John Harter gave the dissenting vote.

"There were enough people in this town that didn’t like the idea, and somebody had to vote against it," Harter said, explaining his vote.

Bowers disagreed.

"I think it’s a fair tax because you’re putting it on an elected product," Bowers said.

Currently, four businesses within town limits sell cigarettes and would have to charge the tax. Sellers must display a cigarette stamp provided by the town. Taxes will be collected by the town treasurer. The tax per individual cigarette will be 1.25 cents, but the total revenue should be around $25,000, according to Town Manager Mike Kehoe.

In other business, the council:

* Adopted a resolution to address "Virginia’s transportation funding crisis," by which the town supports the efforts of the governor and the General Assembly "to act swiftly and decisively to approve legislation that will address the transportation funding crisis at the statewide, regional and local levels."

The resolution also states that such legislation should include new tax and fee revenue, including tolls on new highways, to ensure safe roads, ease congestion, promote economic development and provide consumer choices.

* Held a public hearing on the proposed 2008-2009 budget. No one spoke during the hearing. The total budget is proposed at $1.45 million, compared to $1.66 million for the current fiscal year. The council scheduled a June 12 special meeting at which they plan to vote on the budget.

Also, the council approved a motion extending the deadline to pay real estate and personal property taxes to June 30. Bills were to be due Thursday.

* Voted unanimously to award a contract to American Disposal Inc. for refuse collection. The contract is for one year at $101,192. Evergreen Waste Inc. currently provides the service for nearly $90,000 but submitted a bid of $125,881 for the next year, the second-highest of three bids.

* Voted unanimously to adopt a resolution requesting that the Virginia Department of Transportation reduce the speed limit on U.S. 11 (Valley Pike), 0.95 miles south of the previous town limits, from 55 mph to 45 mph.