Smokers feel the pinch as France raises taxes
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The French government is targeting smokers to help pay off its debt mountain. A new price hike starting in October is expected to bring the debt-burdened government an additional one billion euros in revenues.
In a country famed for its laissez faire attitude toward smoking bans, the French government is now hitting smokers where it hurts: their wallets.
From October 1, French smokers began paying 6.5% to 10% more for tobacco, as an unpopular price rise went into effect. No pack of cigarettes in France will cost less than €6.10, with high-end brands going for €7.
It is not clear whether this price hike will finally push French smokers to quit, as France’s 2008 full smoking ban failed to reduce the number of smokers. The number of 18 to 75-years-olds smokers actually increased by 2 points between 2005 and 2012 to near 30% of the population.
But public health is not the only concern of President François Hollande’s government. The price bump has also been touted as a way to add a badly needed one billion euros to state coffers next year.
Tobacco is just one of a handful consumer items that will see a significant price bump as Paris attempts to combat its €37 billion debt: beer will cost consumers on average 15% more in 2013, bringing in an additional €500 million.
In 2011, levies on cigarettes translated into €13.8 billion in revenue.
No one is happy
However, neither tobacco vendors nor anti-smoking activists are happy with the new measure which will see a pack of cigarettes cost approximately 40 cents more. Tobacco shop owners are worried the price rise – the third since 2010 – will encourage the trend of buying foreign-bought cigarettes.
According to a July 2012 study by KPMG, 21.1% of cigarettes consumed in France come from outside the country. The study, commissioned by tobacco giant Philip Morris, said one-quarter of these non-French cigarettes were legally purchased in duty free shops or neighbouring EU states, but a massive three-quarters were counterfeit or contraband products that escaped any taxation.
At an average price of €7, high-end cigarette brands will be more expensive in France than in bordering countries Spain (€4.25), Germany (€5.16 euros), Belgium (€5.05), Italy (€4.90) and Luxembourg (€4.40).
However, a pack of premium cigarettes in the UK cost around €9.35 (£7.47), or almost €2.50 more than the new price in France.
Meanwhile, French anti-tobacco groups said 40 cents per pack was a modest price hike that would not encourage smokers to stub it out in significant numbers.
Yves Martinet, president of Alliance Against Tabacco, said a “brutal” hike was the only way to break consumer's habits. “A slow and incremental increase, like we’ve seen in the previous five years, has very little effect on consumption,” Martinet told the AFP news agency.
According to data by France’s National Institute for Health Prevention and Education (INPES), Marinet has a valid point. The last significant drop in the number of daily smokers in France - 27% fewer from 2002 to 2004 – was prompted by a significant price rise in 2003.