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Saturday
Mar042017

Philip Morris and ASH want government to increase tax on cigarettes

Gotta love Philip Morris.

The world's biggest tobacco company certainly knows how to grab a headline.

Three months ago when Andre Calantzopoulos, PMI's chief executive, announced that he wanted to work with governments to "phase-out" conventional cigarettes it was a huge story and his comments were reported worldwide.

Today the Telegraph reports:

The world’s biggest tobacco company has for the first time asked to be taxed more by Chancellor Philip Hammond – to encourage smokers to switch to healther alternatives.

Philip Morris, which makes brands such as Marlboro, said it backed an increase in taxes on its cigarettes as part of its bid to move to a “smoke-free future”.

According to UK managing director Peter Nixon:

“We want to move towards a smoke-free future and a lot of that is incentivising people to move across from cigarettes to something that is less harmful.”

To avoid any misunderstanding, I don't have a problem with any tobacco company developing 'safer' products that give consumers more choice. Quite the opposite. I welcome it.

I do however have an issue with anyone who supports an increase on what is already punitively high taxation on cigarettes and rolling tobacco because we all know who will bear the brunt of that increase – the consumer.

And let's be clear. When the Chancellor raises the tax on cigarettes by inflation plus two percent or worse (the so-called tobacco escalator) on Wednesday it will have very little impact on PMI whose market share in the UK is less than ten per cent.

The groups that will suffer most are small retailers (who may lose business to the black market) and law-abiding smokers, especially the less well-off, who don't want to quit or switch to alternative nicotine products.

Remarkably I see very little difference between PMI's call for higher taxes on combustible tobacco and ASH's pre-Budget statement that calls on government to increase the tobacco tax escalator from two per cent to five per above inflation.

In contrast, City AM yesterday reported that:

The Tobacco Manufacturers' Association [which represents Imperial, JTI and British American Tobacco] said the government's policy of increasing taxes on tobacco above the rate of inflation each year has already pushed British consumers into the black market, and the group called for the government to scrap the tobacco duty escalator.

Or, to put it another way:

The TMA is urging the government to adopt a “more effective tax policy”, starting with the removal of the excise duty escalator, in which the tax on tobacco products rises by 2% above inflation every year.

TMA director general Giles Roca said: “Tobacco taxation in the UK is the highest in Europe thanks to successive government’s raising tax notably with an-above-inflation escalator, meaning that on some of the lowest-priced cigarettes, tax can account for 90% of price.

“This simply encourages people to buy from the black market and takes business away from the legitimate trade,” he says. “The government therefore needs to review its approach to tobacco taxation, starting with ditching the failing escalator and it could usefully do this at the upcoming Budget.”

See Trade urges government to re-think tobacco tax policy (Talking Retail).

Clearly the message didn't reach PMI or, if it did, they ignored it.

So here's an idea. Prior to the autumn Budget perhaps Philip Morris and ASH should consider a joint submission to the Chancellor.

That way smokers will know exactly where they stand, and who their friends are.

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Reader Comments (8)

Tobacco companies are now also tobacco control who couldn't care less about what their consumers want. We smokers must be punished for not wanting to try the new toy BT now wants profit from.

I will never buy any product from a thuggish company like PM which is using Govt smokerphobia and greed to force the poor out of choice. The poor patronised fcucking poor are so easy to push around. Phillip Morris should be defending it's most loyal customers and yet it is happy to shaft them and play social engineering alongside the sanctimonious vaping orgs and Nastie Public Health.

So, Iqos is a no go for me - ever.I won't buy from those who use money, power or influence to bully me and other more vulnerable people who have so little but an occasional organic, delicious, smoke to enjoy when so much measure in life is beyond the budget.

Saturday, March 4, 2017 at 13:51 | Unregistered Commenterpat nurse

"... on some of the lowest-priced cigarettes, tax can account for 90% of price."
Which means they are taxed at 900%. Yes, nine hundred percent!

To explain :
If a product costs £1 and is taxed at 20% then it will retail at £1.20.
If a product costs £1 and is taxed at 900% then it will retail at £10.00.

As for Philip Morris, I suspect they were taken over by the global multi-billion dollar anti-smoking industry many years ago. Probably part of the fallout from the 'Master Settlement Agreement' (MSA) which is often incorrectly referred to by the anti-smokers as a court case. It wasn't, hence the name. It was an agreement, reached for mutual benefit between the vast, powerful anti-smoking industry and the senior executives of the four biggest tobacco companies in the USA. Both sides did wonderfully well with the smokers picking up all of the costs.

Saturday, March 4, 2017 at 15:38 | Unregistered CommenterTony

You should reference John Fell's comments on the tobacco companies. As I recall, the more Government put taxes up on combustible tobacco, the more said tobacco company makes from the sale of each packet of fags.

Sounds odd I know, but John Fell described it very well (far better than I can)

Saturday, March 4, 2017 at 16:12 | Unregistered CommenterSimon (not SC)

Tony - I recall reading in Velvet Glove Iron Fist that antismokers did indeed get themselves on the boards of tobacco companies so that they could disrupt industry and the market.

They are dishonest charlatans calling for an end to tobacco companies while claiming money from those companies themselves, at the expense of the smoker.

It looks like the take over is now complete at Phillip Morris at least.

The answer is simple. Boycott Iqos and if you want to try heat not burn, find another source. The market will develop and PM will lose out by turning on the very people it depends upon for profit.

Saturday, March 4, 2017 at 16:15 | Unregistered CommenterPat Nurse

“We want to move towards a smoke-free future and a lot of that is incentivising people to move across from cigarettes to something that is less harmful.”

It looks like Reynolds want to move in that direction, too.
From last year:
http://ajph.aphapublications.org/doi/full/10.2105/AJPH.2016.303456

Saturday, March 4, 2017 at 19:02 | Unregistered CommenterLollylulubes

Unbelievable!
Not only does PM sell junk cigarettes (about half cigarette is made of recon tobacco sheet, scraps, expanded tobacco + a ton of chemicals) they call for them to be even more overtaxed than they already are. For what? For brainwashed smokers to switch to 'safer' products like Iqos where PM's profit margin looks to be even bigger (there's 250mg tobacco in an Iqos stick as opposed to about 550mg in a Marlboro cigarette)

I wish PM to put their 'safer' gizmos where the sun don't shine :)

Saturday, March 4, 2017 at 19:45 | Unregistered CommenterVlad

Actually it's all in the article...PM makes £2,5 per cigarette pack and £4,06 per Iqos pack(with half tobacco quantity needed)...but they only care about smokers and their health, that's why they want them to switch. hahaha

Saturday, March 4, 2017 at 19:59 | Unregistered CommenterVlad

It seems that collusion between tobacco control and tobacco companies is in place in order to maximize profits. It seems the infiltration of public boards is achieving its desired goal.

Extracting profit (extortion) and enforcement are the tools tobacco control uses to derive profit and power. These are the tools go gangsters. As a result, the Bully State has essentially become the public face of the Rentier State.

Saturday, March 4, 2017 at 20:03 | Unregistered CommenterVinny Gracchus

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