Cigarettes: New Government; Same Old Swindle

Thanks to the “Mille Proroghe” (thousand extensions) decree, Italy’s new Monti Government will earn an additional 15 million euro from tobacco; however, Italian smokers will have to pay out almost 20 million.

This is because four and a half are the additional “pizzo”—swindle money—that will go to Philip Morris, British American Tobacco and Japan Tobacco. In fact, the decree plans for an increase of the tax revenue from cigarettes, but not an increase in the tax pressure, which would call for raising the excise aliquot, and this would not be appreciated by Big Tobacco.

All this means that when cigarette costs rise, it is the “cartel” of the three multinationals that raise the prices; it is not the State that decides to increase the taxes. It’s true that when prices rise with this system, the cigarette makers take in more and the State, too, earns more. The problem is that in normal countries, including the countries of the third world, the State receives the entire amount.

How does the “Pizzo” on Cigarettes Work?

Every revenue increase generated by raising the manufacturers’ prices entails a higher cost to smokers; but the cost increase is greater than the amount that goes to the State. Counting VAT and excise duties, for each 10-cent price increase, tax revenue increases by 2.24 %. However, the net profit for the producer, considering a cost of 12 cents per pack, rises by 3.92 %. This 3.92 % profit is the “pizzo” the Italian State is paying to the multinationals.

The cigarette producers who are not part of the cartel are forced to raise their prices, too, by the same amount to not sell at a loss because of Italy’s “minimum tax;” this tax increases by the same amount as the price increase of the three multinationals. In this way, Big Tobacco can raise its prices without having to worry about the competition.

Increasing the tax revenue with price hikes decided by the “cartel,” rather than increasing the excise duties on tobacco (unchanged at 58.5 % since 2004, while in France they have been raised to 64 %), has lifted Philip Morris’s profits on Marlboros up to 600 %, while the Italian State, for many years, has been waiving a substantial part of its tax revenues.

As if this were not enough, with total sales revenue of 2.8 billion euro, Philip Morris, BAT and JTI declare less than 100 million. And no one except Yesmoke dares say anything.

The “Show” of the Servants

While Big Tobacco “fills up” undisturbed, the State, servile and ignorant, is searching desperately in all directions to find 15 million euro. In the end it will take the money from the smokers’ pockets:

“The self-employed will not be further harassed, the government has backed down, attempting to find alternative sources to ensure the legitimate coverage for pensions for early retirees and redundant workers,” wrote La Stampa newspaper.

“The resources for pensions will arrive with an increase in cigarette prices,” announced the Sole24Ore, giving the news without any analysis or comments; on purpose, or are they just ignorant?

“It will be the State Monopolies that have to determine how much more cigarettes will cost in order to ensure an increased revenue of not less than 15 million euro for the year 2013,” wrote the Unità, explaining, unknowingly, that the “cartel” of the three multinationals who are stealing income from the State is coordinated and directed by the State Monopolies – the AAMS.

Even though not disturbing the business of three tobacco giants, a turnabout arrived even of the political parties. Animated by the unfailing and typically Italian—“italianissimo”—sense of responsibility, they have reversed their stand on the pardon of the penalties on posters illegally posted by the parties themselves.

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