A New Tax with a Surprise: Nobody will Pay it Except Yesmoke

The new law decree on cigarettes was made public today. It turns out to be a “minimum tax… Italian style,” which would be paid only by a manufacturer who wants to sell below the limit fixed by the minimum price (that has just been abolished by the European Court sentence).

According to the Government’s tactics, since the tax makes it impossible to lower the price per pack, no one is likely to do so, and so, no one will pay the tax!

This latest joke of Berlusconi’s, effectively is a sort of “penalty” for anyone who might want to take advantage of the abolition of the minimum price; it was thought up by someone who does not give a damn about tax revenues. It is a fine, which, of course, no one is interested in paying … except Yesmoke that has presented a request to the AAMS to lower its pack prices to 3.60 euro.

If the intended minimum excise (or minimum tax) at 115% was questionable, because it was paid only by the brands of the lower price range and not by Marlboros, the minimum tax Italian style beats them all, as it will be paid only by the brands of a price range …that does not exist!

This umpteenth rip off had been announced by various sources, but who could ever have believed in something so ridiculous and irrational?  Actually, the minimum excise indicated by the European Union would already have been half a rip off and that would have been bad enough.

The newspapers, too, were expecting a real tax and they had written:

“a sting on low-cost cigarettes;”

“The new tax will bring a little treasure to the State coffers;”

“Thanks to this tax, more revenue for the earthquake victims of Abruzzo…”

The European Court’s sentence on Italy’s minimum price had also been the subject of headlines and comments: “the minimum prices of cigarettes in Italy are incompatible;” “We have to comply with the European sentence…”

Practically, the new tax does not bother anyone except those who might want to sell below the 3.80 euro a pack of the old minimum price, for example at 3.70 euro: they would come up against a tax that would force them to sell at a loss.

The Government’s remarks on the new tax are touching: “It represents a viable compromise between the public interests of the State Revenue and the commercial needs of the manufacturers.”

Yesmoke’s “tesoretto”—little treasure—for the earthquake victims of the Abruzzo

With Italy’s version of the minimum tax, everything is exactly the same as it was before: the State does not take in a single cent more, continuing to give up its tax revenues, and the prices and the profits of the producers remain the same.

In the end, it is thanks only to Yesmoke that is lowering its prices to 3.60 euro, that Italy will collect the “foreseen greater income to help the people of the Abruzzo.” The Italian Government has pulled from its top hat a law decree so insane that not even the ingenious creativity of a banana republic could have done better.

How is it possible that a stunt like this, that openly safeguards the interests of foreign manufacturers sacrificing tax income and blatantly eluding the European sentence on the minimum price, could have been thought up, implemented and sponsored by the Government?

Is it possible that, to face up to Yesmoke, they could have come up with this? The law decree on the minimum tax is crazy and unsustainable. It will have as a consequence another condemnation of the European Court and the payment of further damages to Yesmoke.

Now there are 60 days to convert this brainless decree into law. Will anyone speak up about the tax that no one will pay, called “the rip-off on low-cost cigarettes”?  And if the decree lapses, what scenario will we be facing?

This latest brainchild of Big Tobacco’s “lobbyists” lurking in the Finance Commission, is an exaggeration that is grotesque;  it just shows that the tobacco multinationals have reached the end of the line. Sooner or later, Yesmoke will bring order into this madhouse.

The Minimum Tax, the Italian Way

When the European Union indicated the minimum excise (or minimum tax) as the appropriate way to raise cigarette prices, it intended a tax called minimum because it could not go below a certain level but it was to be applied to all cigarettes. Otherwise, it could not be defined “minimum.”

To the European directives that indicated the minimum excise as the solution, the Italian Government added that the tax would be applied only to those who sold their products below the set minimum price.

In reality, this is not the minimum tax intended by the European Commission; it is a sort of “fine” for any manufacturer who wants to benefit from the abolition of the old minimum price, a “penalty” which, obviously, no one is planning to pay.

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