Cigarette Taxes – The Swindle Continues

The Government, not intervening on the excise on cigarettes, blocked since 2004 at 58.5% in Italy whereas in France it has been raised to 64%, confirms it has the interests of the tobacco multinationals as a priority.

Since 2004 the price of cigarettes has climbed constantly, but delivering the blow, ten cents at a time, is not the State with its taxes, as everyone believes, but a “cartel” that holds 99% of the Italian market; it is made up of Philip Morris, British American Tobacco and Japan Tobacco. The interests of these 3 companies seem to be untouchable.

The European Court Sentence which the Government Pretends It Doesn’t See

The cigarette swindle in Italy continues with the coordinated price increases decided and imposed by the cigarette ”cartel.” This is possible in a market without free competition because the three tobacco giants are protected by Italy’s “minimum tax.”

Gianfranco Polillo, the new Undersecretary for the Economy

Gianfranco Polillo, the new Undersecretary for the Economy

The European Court of Justice sentence of 24 June 2010 intended to restore a competitive market when it abolished the “minimum price” of cigarettes applied in Italy. But the minimum price was immediately replaced with the “minimum tax” (D.L. 94 – 23 June 2010), which clearly eludes the Court’s ruling. In a free market without the minimum tax, the price of cigarettes would go down, along with the manufacturers’ profits. In this situation the State could raise the excise and increase its tax revenues without raising cigarette prices. Why should Big Tobacco make higher profits in Italy than in France? And why should the Italian revenue earn less than the French revenue?

The explanation for not increasing the taxes on cigarettes given by the new undersecretary, the “tecnico” Gianfranco Polillo makes no sense:

“We have come close to the critical threshold of five euro a pack, above this there would be a strong drop in consumption and of the sector.”

Polillo is saying, in effect, that taxes cannot be raised because Big Tobacco has already raised cigarette prices to the limit. The government falls even lower when the “tecnico” explains that “the excises on tobacco provide us with 14 billion euro of income yearly, which is a good sum, so we can’t complain.”

And we must not forget that the three cigarette multinationals have moved all their manufacturing outside of Italy; so they succeed in claiming earnings in Italy of below 100 million euro a year, while they take home 2 billion euro in real profits… tax-free.

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