Belgium: Health group calls for taxing tobacco industry profits

Tobacco manufacturers are making disproportionate profits compared to the health and environmental damage they inflict. A group of health professionals is calling for a heavy tax on these profits to fund prevention efforts in the country.

The operating profit margins achieved by tobacco multinationals in Europe are enough to put other industrial sectors to shame. In 2021, these margins in the European Union stood at 49.8 billion for Philip Morris International (PMI) and 43.4 billion for British American Tobacco (BAT), while those of international food and brewing groups were between 15 and 16 billion. In 2018, six of the largest tobacco companies (excluding China) earned $55 billion in profits, more than Coca-Cola, PepsiCo, Nestlé, Mondelez, Fedex, General Mills, Starbucks, Heineken, and Carlsberg combined.

Taxing profits to rebalance tobacco costs

In a column published on November 16, a group of health stakeholders including the Foundation Against Cancer, the Alliance for a Tobacco-Free Society, the Service for the Study and Prevention of Tobacco Use, and the Hainaut Health Observatory called for the tobacco industry's profits to be taxed.[1]. Members of this group believe that the tobacco industry can only generate such margins because the costs – both health and environmental – that it generates are externalized and essentially borne by smokers and the rest of society.

Under the European directive on single-use plastics, tobacco manufacturers will be required, starting next January, to partially finance the costs of collecting, disposing of, and processing cigarette butts, which, however, represent only a limited portion of the overall environmental costs. Tobacco production, product transport, and the processing of other environmental impacts (packaging, etc.) therefore remain outside the scope of this directive.

Financing a tobacco control fund through taxation

The staggering cost of healthcare is borne solely by smokers and the community, and is far from being covered by tax revenues from the sale of tobacco products. It is in this regard, in particular, that the group of Belgian healthcare stakeholders is calling for a transfer of responsibility. According to them, the tobacco industry's profits should be taxed to fund cessation care for smokers, as well as prevention initiatives for young people. The current context of high inflation would further justify relieving consumers and taxpayers, and further taxing manufacturers for the damage they cause.

A similar project to tax profits through distributors, subsidiaries of manufacturers, was approved in France in 2016, but stalled over certain clauses in the contracts between these distributors and manufacturers. Ultimately, an increase in consumption duties on tobacco products was chosen to fund the tobacco control fund.[2], which later became the fund to combat addictions. This fund has since funded smoking cessation support, prevention initiatives, and information campaigns. However, the question of taxing manufacturers remains fully relevant in light of all the negative externalities they currently impose on society and public budgets, regardless of the countries concerned.

Keywords: Belgium, taxation, profits, tobacco control fund

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[1] Gabriels S, Bizel P, Van Kalmthout D, Corman C, Use the tobacco industry's huge profits for people's health, La Libre Belgique, published January 17, 2022, consulted March 12, 2022. [2] Decree No. 2016-1671 of December 5, 2016 establishing a fund to combat tobacco, Légifrance: “Art. R. 262-1-2.-IV.-The expenses of the fund are financed by a levy on the portion of the consumption duty on tobacco provided for by article 575 of the general tax code allocated to the national health insurance fund for salaried workers. National Committee Against Smoking |