Inflation: the government could increase taxes on cigarettes

A pack of cigarettes over 11 euros. This is what could well be the norm in 2023. The government is indeed considering taxing tobacco more, according to information from our colleagues from Les Echos. While the Social Security Finance and Financing Bills (PLFSS) will be presented on Monday, the automatic rule for increasing excise duties according to inflation could be reviewed.

Currently, the law indicates that this increase must be calculated in relation to that of prices for year N-2, and with a cap of 1.8%. With this method of calculation and the cap much lower than inflation, cigarettes and other rolling tobacco would clearly be protected by the price increase.

New financial resources

But not everyone hears it the same way. At the Ministry of Health in particular, there is a push to remove the ceiling from this method of calculation by modifying the legislation in the PLFSS, to take the year N-1 as the basis. That is increases in rights of 5% to 6% at the start of 2023 (according to the inflation observed in 2022), “even 7.5% by adding the price increases observed in 2021 and 2022”, according to Les Échos. Put simply, top-selling packs of cigarettes could cost 70 cents more. For example, a package of Marlboro, one of the best-selling brands in France, could go from 10.50 euros to more than 11 euros.

On the side of Bercy, we refuse to comment. But in the entourage of the Minister of the Budget, Gabriel Attal, it is recognized that, this year, the new financial resources or the savings will come from the PLFSS. The new tobacco tax could therefore be one of them.

However, the measure would not be completely settled. Some elected officials consider it very unpopular – in a context of high inflation with in particular the rise in the price of gas and electricity in 2023 – while there are still 15 million smokers in France.

An “economic disaster” for tobacconists?

On the side of tobacconists, reluctance is also heard. “We had obtained from the government a tax freeze in 2021 and 2022, after the very big trajectory 2018-2020, and of course, this question (…) is the subject of negotiations between us, Customs and Bercy” , first recalled Philippe Coy, president of the Confederation of tobacconists. Then to add: “For the moment, nothing is arbitrated but it will not be long (…) I am worried: it has been 20 years that the tax tool has been used, and that has increased the parallel market, and resulted in an economic disaster for our network with 10,000 establishments closed in 15 years”.

For the president of the Confederation of tobacconists, who will hold its annual congress on October 20 and 21 in Paris, any increase should be “very moderate, around 20 centimes per year”. And to claim “multi-year visibility of taxation, as under the previous five-year term”, allowing professionals “to pilot the liner and find the right directions”.

In France, some 24,500 retailers live from the monopoly of the sale of tobacco, which generates 60 to 80% of their income.

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