As planned by the French government, the average price of a packet of cigarettes will be 60 cents more expensive starting March 1 2019. The decision was made in hopes of reducing the number of smokers in France. Not surprisingly, tobacco companies are unhappy about the decision.
The new price increase is linked to a new government surtax that is intended to ultimately raise the price of a packet of cigarettes to 10 Euros by 2020. Consequently, the price of a 20-pack of Marlboro Reds, the most popular cigarette in France, will increase from 8.20 Euros to 8.80 Euros.
According to the French health ministry, these successive tobacco price increases have had a positive effect on public health. In March 2018, the 70-cent price increase led to a 9.32% drop in sales. Since 2017 in France, 1 million people have already quit smoking in a country that counts 75,000 tobacco-related deaths every year.
Opponents of the new tobacco tax
In the opinion of many tobacco manufacturers, the price increases have had had a perverse effect on the industry, since packets sold on the black market are on the rise throughout France. According to a Bit Tobacco-sponsored study, 1 out of every 4 cigarettes consumed in France comes from illegal markets or border countries. Last year, French customs reported a 15% increase in the seizure of contraband cigarettes.
Tobacconists aren’t happy about the drop in sales, but they have also complained about administrative headaches due to both a drawn out process and having to change so many price tags.
Additionally, the president of Philip Morris France, Jeanne Polles, pointed out that the price increase is harmful to the French economy. Currently, taxes make up 82.3% of the price of tobacco, meaning that manufacturers only see 7.9% of sales, and tobacconists only 9.9%.