Tobacco Taxes – We Are Giving up 900 million

The latest sting, called “minimum tax” is a tax on cigarettes that no one will pay. For the joy of Big Tobacco, the added income for the State will be zero.

On the contrary, the “minimum excise” indicated by the European Union would bring an additional 900 million euro into the State coffers every year without disrupting the tobacco price lists.

With the “minimum excise,” the prices in tobacco shops of the most expensive cigarettes would stay the same, while the prices of the cheaper brands (MS, Diana, Winston, Pall Mall etc.) might stay the same, or increase just slightly, at the discretion on the manufacturer.

If we calculate the income for the State based on the “minimum excise” indicated by the EU, instead of the “minimum tax” invented by Italy, with an annual consumption of four and a half billion packs, the total comes to 900 million euro more of public money.

This is only an approximate figure, because some variables would have to be considered due to possible slight price changes of some brands but substantially, the treasure would come to this amount, a million more or a million less.

Where would this money come from? The 900 million increase would not be the result of higher prices paid by the consumers, but of the resizing of the profits of the manufacturers, who, thanks to free competition would be forced to limit their prices, as happened in France with the abolition of the minimum price.

The measure would leave only a minimum part to be paid by the final consumer; he might find himself having to pay ten or twenty euro cents more on some brands in the lower price range.

Let’s Make Big Tobacco Pay

The cost to produce a pack of 20 «Virginia Slim» cigarettes is about 7 euro cents. Philip Morris sells them to the distributor for 67 cents, raking in a profit of 870%.

According to their own balances, in Italy foreign multinationals report less than 150 million euro; they hold 99% of the Italian market that earns them 1.8 billion in profits.

Philip Morris Italia has its cigarettes manufactured abroad by an affiliated company and from this it acquires its cigarettes at a price that shows insignificant profits in Italy.

JTI, that sells its products in Italy through a Dutch company, does not even fill in a tax report for the sale of cigarettes in our country. Officially, the activity of JTI Italia is “company of consulting and public relations, wholesale of various durable goods.”

Big Tobacco earns unbelievable profits in Italy, totally outside the market, and to top it off, moving all its cigarette production outside our country, it has found a legal loophole not even to pay taxes.

The State is Inert

The comment of the Government on its new tax is pitiful:

“It represents a suitable compromise between the public interests of tax revenues and the commercial needs of the manufacturers.”

One is led to think that things favor the interests of the big powers of the market because they fodder the politicians as necessary. However, this is not necessarily the case.

Actually, there are a few and relatively insignificant political supporters in the pay books of Big Tobacco, cultivated with gifts, subsidies and reimbursements amounting to a bit of change. But this is nothing compared to the billions of euro of public money taken out of the country.

The determining factors in this situation, more than corruption, are the superficiality, the incompetence, the stupidity, the chaos and the inertia of the State, ably exploited by some cunning individuals, in a social context of general disinterest.

Tax Italian Style

The “minimum excise” indicated by the European Union is a tax called “minimum” because it cannot go below a given set level, but it is to be applied to all cigarettes. Otherwise, it could not be defined “minimum.”

On the contrary, Italy’s new “minimum tax,” invented by the AAMS does not harm anyone except a cigarette maker who might want to sell below the 3.80 euro of the old minimum price (just abolished by the EU). He would find a tax that would force him to sell at a loss.

The minimum tax is nothing more than a “fine” against anyone who might want to take advantage of the abolition of the minimum price. Naturally, it is a “fine” that no one is interested in paying. So, no one will lower their prices, no one will pay the tax, and everything will remain exactly the same as before.

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