Here’s how Philip Morris Continues to Rip Off the Italians

The tobacco market of the Italian boot is the richest in Europe; this past year manufacturers divided up a sales revenue of 2 billion 800 million euro. But how much tax did they pay?

How much would Yesmoke S.p.A. have to declare to the revenue authorities if it sold in one year two and a half billion packs of cigarettes, like Philip Morris does?

According the 2007 financial statements (the 2008 ones are not available yet), on a sales revenue of 1 billion 446 million euro, Philip Morris declared profits of only 53 million 320 thousand euro.

At the price of 3.40 euro, Yesmoke would already reach a profit of 500 million, a figure not even comparable to the one reported by Philip Morris.

But with an average sales price of 4.00 euro, which is approximately Philip Morris’s average sale price (ranging from Dianas at 3.70 to Marlboros at 4.40 euro), Yesmoke would have to report a profit of 1 billion 175 million euro!

Year Fatturato Philip Morris – Italia Profits Philip Morris – Italia
2003 1.387.077.576 Euro 77.753.095 Euro
2004 1.281.506.921 Euro 26.625.475 Euro
2005 1.313.050.704 Euro 48.260.016 Euro
2006 1.357.603.757 Euro 37.865.887 Euro
2007 1.445.480.930 Euro 53.320.732 Euro

How on earth can Philip Morris declare only 53 million with an invoiced revenue of 1 billion 446 million euro, considering, too, that the company has only 300 employees in Italy (almost all salesmen), a rented office in Rome and not even a cent of debt with the banks?

Big Tobacco’s System in Italy

Philip Morris Italia s.r.l. does not produce a single cigarette in Italy. A “master case”* of cigarettes produced in the Philip Morris plants in the Czech Republic or in other countries of the European Union does not cost 65 euro, like it does at Yesmoke; it costs 280 (two hundred and eighty) euro! This is a ridiculous affirmation for anyone working in the sector.

*A master case contains 50 cartons, and a carton has 200 cigarettes.

Yesmoke’s production cost of 65 euro per master case includes all its costs including the specially selected tobaccos and all the other top quality materials. This all adds up to a cost of 13 cents for a pack of 20 cigarettes and this can be considered a very high production cost for cigarettes. But somehow, Big Tobacco manages to make a pack cost 56 cents!

A cigarette with production costs of more than 13 cents per pack is difficult to imagine: checking market quotations, no tobaccos exist with a price that could justify a higher cost.

If Philip Morris produced a cigarette like Yesmokes, with the same generosity in the quality of the components, it would certainly spend less (than Yesmoke), thanks to its immense volumes. But, no, here is the surprise: 280 euro!

They Have Let Them Steal Everything

The situation is so grotesque and degenerated, that they almost totally evade taxes without even having to hide it.

They just steal, that’s all, knowing that those “brave young men” of the Guardia di Finanza will mind their own business, that no judge will stick his nose into their business and that even Di Pietro will stay in his place.

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