Why are tobacco-processing factories being closed in Italy and their workers laid off? The cigarette market is not feeling the economic crisis. Philip Morris, British American Tobacco and Japan Tobacco, that hold 99% of the market, bring in profits per pack in Italy considerably higher than those of other European countries, they have no competition and they pay no taxes.
Today no one would invest a euro in the Italian market. However, with the abolition of the minimum price and the safeguarding of free competition as established by the recent European Court sentence, there would not be only these three companies dividing up the market.
Italy would become the place to invest in, and no one would let a “turnkey” factory go, like the one B.A.T. wants to close in Lecce, even if it had manufacturing costs twice the normal.
It all began in 2004 when B.A.T. purchased Italy’s tobacco production, the Ente Tabacchi italiano, for the joy of our politicians, who, after collecting the cash, adopted tax policies and market rules that favoured this company.
The minimum price would protect B.A.T. and with it, the other two multinationals, from every possible form of competition, assuring them profits far above the market, to the detriment of the State’s tax revenues and precluding the birth of new companies in the sector. And it seems like no one realised the real value of the gift.
Since 2005, the year when the minimum price was introduced, even though financial analysts concluded every year with the ritual “the fiscal revenue objectives have been reached” (but on what basis were they formulated?), the State gave up, year after year, income greater than what it collected one time only with the sale of the E.T.I. So, in the final analysis, the E.T.I. was effectively given away to B.A.T.
Since then, B.A.T. has closed 21 of the 22 plants, leaving the problem and costs of the laid-off workers with the collectivity. To crown it all, today these three companies have shifted their production abroad, so they get away with not paying Italian taxes because their cigarettes are produced outside Italy.
On last June 24th, the European Union ruled that the minimum price is illegal, because it obstructs free competition and safeguards the manufacturers’ profits at the cost of the State’s revenue. The Court instructed that prices must be taken to the desired level not with a minimum price but with variations in taxation.
Italy’s perverse and absurd system, which some idiots would like to extend to eternity, with the shutdown of the last ex-E.T.I. plant, is putting an end to Italian cigarette production (with the exception of Yesmoke) and causing the loss of jobs of all the workers of the sector.
A great result if we consider that, until 2004, 95% of the cigarettes smoked in Italy were produced in Italy.