Why does the price of a package increase faster in Corsica?

At 1^er In January, tobacco prices in Corsica increased more rapidly than in mainland France. This difference is explained by the island's tax catch-up, as tobacco products have historically benefited from tax breaks. While public health objectives have required Corsica to align with mainland France, tobacconists are calling for additional time in the harmonization strategy.

In metropolitan France, the increase from a pack of twenty cigarettes to the 1^er January was included between 50 cents and one euro, depending on the brand. This increase is explained on the one hand by the indexation of tobacco product taxation to inflation, thus preventing the relative price of tobacco from decreasing. On the other hand, this increase is due to the pricing policies of manufacturers, some of whom have taken advantage of the absence of tax policy to increase their margins on their products. In Corsica, this increase is increased, raising the price from 8.40 to 9.80 euros[1].

A special tax status dating back to Napoleon I^er

The differences in tobacco prices between Corsica and mainland France are explained by the island's special tax status, granted by a decree of Napoleon Bonaparte in 1811, establishing a lower price for 25% tobacco in Corsica than in mainland France. A 2018 report by the General Inspectorate of Finance (IGF) estimated that this special tax status resulted in an annual loss of revenue of €26 million.[2]. These tax breaks on tobacco, regularly presented as "advantages", are however not without consequences for public health in Corsica. Indeed, in its same report, the IGF highlighted that "deaths from lung cancer are 25.7 % higher in Corsica than in mainland France". For these reasons, after several years of discussions, the specific tax status of tobacco in Corsica was called into question by the Finance Bill in 2020, staggering a gradual tax catch-up, aiming for almost complete price harmonization with mainland France by 2025 (at this date, prices on the Island will still be 5% lower than those charged in mainland France).

The end of this exception displeases tobacconists

For their part, tobacconists have shown their discontent following this increase which took place on 1^er January. Interviewed in the press, José Olivia, president of Corsican tobacconists, stated that tobacconists were heading "for disaster," impacting the economic balance of "800 families." The tobacconists' representative also stated that he had met with several parliamentarians to obtain a moratorium on taxation. These requests for moratoriums or additional time limits are regularly requested by several MPs, such as Michel Castellani, MP for Liberties, Independents, Overseas Territories (LIOT) for Haute-Corse, who believes, along with the tobacconists, that the island's special tax status is an "advantage [...] that promotes an increase in sales volume during tourist periods."[3].

FT

[1] Capital, Tobacco price increase: Corsican tobacconists fear a “catastrophe”, 07/01/2024, (accessed 08/01/2024)

[2] General Inspectorate of Finance (IGF), For a 21st-century Corsican economy: proposals and directions, 10/2018, (accessed 08/01/2023)

[3] National Assembly, Amendment No. I-30-51, filed on 10/13/2023