Japan, long considered a smokers' paradise, is planning to raise tobacco tax from next October in a bid to repair its tattered public finances, officials said Tuesday.

The cabinet approved a proposal by a government panel to hike the duty by 3.5 yen (3.8 US cents) a cigarette.

The move would increase the price of each cigarette by about five yen, of which about 1.5 yen would go to cigarette makers and retailers. It would add 100 yen to the price of a pack of 20 cigarettes now selling for 300 yen.

The hike would puts heavy-smoking Japan closer in line with other developed countries, which nearly all impose heftier taxes on cigarettes and more tightly restrict public smoking.

The announcement provoked dismay in Japan's tobacco industry, with former state-owned monopoly Japan Tobacco (JT) describing it as "regrettable."

"Declines in the smoking rate and contraction of the tobacco market have already been accelerating in Japan, due to a declining and ageing population, repeated tax hikes and the introduction of increasingly stringent regulations," the company said in a statement.

"The effects of such an unprecedented excise increase on consumers and the industry in this difficult environment is immeasurable."

The tax panel said the tax hike was also desirable for a public health viewpoint.

Official anti-smoking policies have reduced smoking rates in Japan, but many campaigners say much remains to be done to stamp out the cancer-causing habit.

Japan's smoking rate is on the decline but still higher than in other developed countries, with some 40 percent of men and 13 percent of women lighting up, according to industry figures.

Smoking is still commonplace in Japan's bars and restaurants, unlike in most other developed countries. But streets, trains and railway platforms are becoming increasingly smoke-free.

The decision to raise the tobacco tax comes as Japan's three-month-old government struggles to keep a lid on the country's mounting public debts.

The Organisation for Economic Cooperation and Development has warned that Japan's public debt is set to soar to more than 200 percent of gross domestic product by 2011.