France Debates New Law Taxing Cigarette Profits

Photo: Flickr.com/Tjebby van Tijen

The right to smoke despite significant proven health risks has been a long-standing three-way battle between cigarette companies, governments, and smokers themselves. It is not always clear where to place the responsibility for the 5.4 million people who die worldwide each year from tobacco-related illnesses. In France, tobacco-use is responsible for 60,000 deaths each year.

On Monday, July 23 Jean-Marie Le Guen, deputy of the Parti Socialiste (PS), proposed an amendment that would tax the profits of cigarette manufacturers. This is a new approach, taxing the manufacturers themselves as opposed to the consumers. In theory, the price of a pack of cigarettes will not be affected by this measure.

Smoking prevention traditionally consists of increasing the price of tobacco, but because most people continued to buy cigarettes despite the price increases, those profits have simply gone straight into the pockets of the cigarette companies.

According to Professor Dautzenberg, President of the French Office against Nicotine Addiction (OFT), raising the price of tobacco as a way to decrease smoking is ineffective.

Jean-Marie Le Guen wants to use the profits from this new tax to fund prevention programs as well as to fight against nicotine addiction. “We need to make tobacco a public health measure,” Le Guen said.

There is a clear distinction to be made between a tax on cigarettes and a tax on the production of cigarettes. Since the end 2009, there have been three 6% increases on the price of cigarettes (a fourth increase is scheduled to take effect in September). According to Le Guen, these measures are unrelated to the real issue. These price increases “decrease individual consumption of cigarettes…they do not have any negative impact on the sales of the producers.” In the past four years, sales by tobacco companies have increased by 26%.

The tax would bring the government a significant amount of money each year in order to establish numerous programs for prevention against tobacco use, and to fund research that could be useful in decreasing the amount of deaths that occur each year from tobacco use. The tax would be collected in two parts over two years, and the estimates for what the government could have collected in 2010-2011, had this tax been in place, amounts to €203 million.

There is a lot of information presented by cigarette lobbysits. The producers’ argument against the regular increase in prices is that it will cause more people to buy contraband cigarettes that are more harmful to smokers’ health than the cigarettes currently being sold. Le Guen explains that we do not have enough information to make this claim.

Tobacco prevention is a multi-faceted issue that involves people in all sectors of the government. Yves Bur, an UMP representative in the National Assembly, wants to remove the issue of tobacco control from party politics. The French state receives €18 billion a year from taxing the tobacco industry ($24 billion). Bur aims to wean the government off of this money because he believes that tobacco control should not be determined in the Ministry of Finance.

Xavier Bertrand, France’s Health Minister, wants to implement all of the measures of the World Health Organization’s framework on tobacco control that France ratified in 2004.

Budget Minister Jérôme Cahuzac confirmed that beginning on September 1, there will be a new 6% increase in the price of cigarettes that was passed by the previous government under Nicolas Sarkozy. Every packet of cigarettes will now cost more than €6, with Marlboro, the most sold brand in France, costing €6.50. As has been pointed out by Le Guen, these increases are effective in decreasing individual sales.

But the situation is more complex than a simple tax to decreases cigarette consumption, with two serious side-effects. Cigarettes can be up to 30% cheaper when purchased abroad, which will harm the French market. Yves Trévilly, a spokesperson for British-American Tobacco explained that the previous 6% price increase cost the French government  €500 million.

Although the amount that would be collected from the new tax is small in comparison to the €500 million Trévilly claims the government loses each time it increases the prices of cigarettes, the money would be coming from the budget of the manufacturers, and not from the pockets of the French citizens. Taxing the manufacturers directly will also limit the influence of the tobacco industry and its lobbyists. The decision whether or not to adopt the new tax is expected to be made soon.

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  1. [...] October 2012, the Government raised taxes on cigarettes to raise state revenues. A pack of normal cigarettes now costs €6.10 in France, with higher end [...]

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