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Thanks to the “Mille Proroghe” (thousand extensions) decree, Italy’s new Monti Government will earn an additional 15 million euro from tobacco; however, Italian smokers will have to pay out almost 20 million. This is because four and a half are the additional “pizzo” – swindle money – that will go to Philip Morris, British American Tobacco and Japan Tobacco. In fact, the decree plans for an increase of the tax revenue from cigarettes, but not an increase in the tax pressure, which would call for raising the excise aliquot, and this would not be appreciated by Big Tobacco.
All this means that when cigarette costs rise, it is the “cartel” of the three multinationals that raise the prices; it is not the State that decides to increase the taxes. It’s true that when prices rise with this system, the cigarette makers take in more and the State, too, earns more. The problem is that in normal countries, including the countries of the third world, the State receives the entire amount. Read more »
The tobacco market of the Italian boot is the richest in Europe. Last year cigarette manufacturers divided up a turnover of 2 billion 800 million euro... But how much tax do you think they paid on it?
Russian President Medvedev has proposed reducing taxes on company profits from the current 34% to the previous level of 26%. But Putin does not agree and has reminded him that the increase to 34% was necessary to sustain the retirement fund and to modernize the health system.
“In this phase there is the risk that further price increases, consequent to the growing fiscal appetite, will encourage a shift towards illegal sales channels”; this is written in the introduction of the latest issue.
Looking ahead to a possible increase of the excise tax on cigarettes, the campaign continues on the “risks” that could derive from such a move. One of these is that Big Tobacco would be obliged to raise its sales prices and this would lead to a growth of smuggling.
“Be careful about increasing taxes on cigarettes”, warns the Italian financial newspaper Il Sole 24 Ore «it could have depressive effects on production and on demand”.
