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Lecce: Globalization to Avoid Paying Taxes

BAT decided to “delocalize” its production of MS cigarettes from Lecce in southern Italy to Germany even though the Italian plant was making millions in profits, and in the last two years the cigarettes produced climbed from nine to thirteen million tons.

Why was the plant dismantled? The explanation is for “fiscal” reasons: if you manufacture abroad you don’t pay Italian taxes, and in fact, you don’t pay them anywhere.

Until 2004, 99% of the cigarettes we bought in tobacco shops were produced in Italy, including some “foreign” brands and the makers paid Italian taxes up to the last cent. Today, eight years after the privatization of the Ente Tabacchi Italiana, all the manufacturing has been “delocalized” and 99% of the cigarettes sold here are produced outside Italy. This enables the three tobacco giants Philip Morris, BAT and Japan Tobacco to avoid paying Italian taxes.

Manufacturing their cigarettes in other countries allows the makers to declare production costs that they can inflate as much as they please, like Philip Morris does, or to be inexistent for the revenue authorities, like Japan Tobacco; it sells in Italy through a foreign company and doesn’t even file a tax report. So, after shutting down the last of Italy’s twenty-one cigarette factories and leaving six thousand workers without jobs, BAT too, can stop being a tax-payer.

In 2011 the three multinationals, with an invoiced revenue of 2 billion 800 million euro, reported a total profit of only 120 million. In 2012 how much of this figure will remain? If Yesmoke S.p.A., which manufactures all its cigarettes in Italy, had had a turnover of 2 billion 8 hundred million euro, at the sales prices of Big Tobacco it would have had to report a profit of 2 billion 200 million, without any possibility of making a mistake.

They Forgot About the Workers

After a little more than a year from the agreement signed at the Ministry for the conversion of the plant, the promises made to the 500 workers have not been kept. Ms. Teresa Bellanova, Member of Parliament of the Democratic Party and also a long-time leader in the CGIL labor union with a history of battles against Italy’s “caporalato” – illegal hiring, denounced to Lecce ‘s «Il Paese Nuovo» the shady issue of the failure to convert the factory, and BAT’s responsibilities:

“So I’m asking again for clarity because other businessmen have already shot similar films in our territory; in a situation of general indifference, nothing is done, leaving behind only the loss of jobs and further economic hardships. That is why I am asking all the local institutions to be vigilant, to take action with all their powers to demand the utmost seriousness on this matter, first of all from BAT Italia, which with inexplicable haste was allowed to shut down an activity that was earning millions in profits, and which until the 2nd of December 2010 represented the pride of our territory, a territory that had already been depleted of thousands of jobs. We must ask this multinational, even more than individual companies, to act with ethical responsibility and fulfill the agreement they underwrote. It was BAT Italia itself that promoted that agreement and promised to ensure its full implementation. This implementation today, unfortunately, continues to be light years away.”

And to cap it all, after eliminating in a clean sweep 6,000 work places, and preparing to become a fugitive from Italian taxes, BAT has given us a special surprise on the package of MS cigarettes: a nice little Italian flag, accompanied by an ambiguous leaflet that highlights the Italian quality of the cigarette; it is a derisory attempt to make people believe that the cigarette is still “Made in Italy.” And all this with the apparent complicity of Italy’s cigarette production control agency, the Agenzia Autonoma Monopoli di Stato (AAMS) that approved it.

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