25 euro packet of tobacco: CNCT reacts to the proposal

Faced with the proposal of a parliamentary mission to increase the price of a packet of cigarettes to 25 euros, the National Committee published a press release reacting to the associated report, which we reproduce in its entirety:

The Social Security Evaluation and Control Mission (MECSS) of the Social Affairs Commission has published its report on behavioral taxation in health. This recalls the effectiveness of tax policies in the fight against smoking and calls for a regular increase in the price of a packet, to reach 25 euros in 2040. The MECSS also deplores “the failure of the fight against smoking” in France, which the report explains by its “erratic nature”. The CNCT shares the observation of the need for a coherent and long-term tax policy and welcomes various recommendations made to strengthen the effectiveness of the measures adopted, but it deplores the low level of the recommended increases (3.25% per year).

Tax increases effective in reducing tobacco consumption

The MECSS reiterates the importance of implementing a tax trajectory on tobacco products, by increasing their price by at least 3.25 % per year excluding inflation until 2040, to reach a pack of cigarettes at 25 euros. However, this proposal is based on the assumption of inflation of 1.75% per year, leading to a total increase in the price of tobacco of 5%. This threshold of 5% per year would thus guarantee reaching a pack at 25 euros in 2040, the objective set by the MECSS.

This proposal, however, falls short of the targets set by the previous MECSS report of 2014, which recommended an increase in tobacco prices of 10% per year, in line with the recommendations of the scientific literature and the World Bank. However, the new MECSS report does not rule out planning a price increase of 10% for certain years, in light of the effectiveness of the tax policies implemented between 2018 and 2020.

Tax increases do not help parallel markets

The CNCT welcomes the report's development regarding the assessment of parallel markets. The MECSS stresses the need to “to put into perspective"the argument that tax increases would favour parallel markets, recalling in passing the unreliability of the report KPMG, funded by Philip Morris International and dedicated to estimating off-network purchases. MECSS says the tobacco industry's own figures show that "The continued increase in the share of the parallel market since 2010 is mainly due to the reduction in the number of cigarettes sold by tobacconists”.

Relevant recommendations to combat off-grid purchases

The MECSS recommends to “quantify the number of cigarettes sold on the parallel market using a reliable and transparent methodology". This need to produce rigorous data on parallel markets is shared by the CNCT, which has been calling for several years for the publication of existing data concerning the monitoring and traceability of tobacco products, from the factory to the retail trade. The CNCT also subscribes to the recommendations made by the report for fight against parallel markets, through an increase in tax harmonization in the European Union, and the establishment of supply quotas for national markets corresponding to real consumption levels, a measure already supported by the current Minister of Health, Mr. VALLETOUX, when he was a member of parliament.

Sales to minors and increase in remuneration: contradictory measures

While the CNCT approves the report's recommendation to better ensure compliance with the ban on the sale of tobacco to minors through increased controls, sanctions, and the implementation of age verification tools, the association nevertheless regrets the proposal to increase tobacconists' remuneration for tobacco sales. As the MECSS indicates, the tax increases have not penalized tobacconists. On the one hand, because "There is no clear correlation between increases in cigarette prices and changes in the number of tobacconists", and on the other hand, because the remuneration of tobacconists is proportional, the more the price increases, the more the remuneration of a tobacconist on the sale of a packet increases, largely compensating for the decreases in volumes sold. In other words, "The increase in the price of cigarettes usually results in a smaller rate of decline in quantities sold.". The increase in tobacconists' remuneration for tobacco sales is also a structural incentive to maximize sales, which is incompatible with public health objectives. In this respect, it is worth remembering that approximately two out of three tobacconists continue to sell tobacco to minors, and that this profession benefits from substantial financial support from the public authorities.

Lack of consistency in the taxation of new tobacco and nicotine products

Finally, the CNCT welcomes the recommendation of the rapporteurs who recall the need to align the taxation of heated tobacco with that of manufactured cigarettes, thus taking no account of the misinformation from manufacturers regarding the lesser harmfulness of these products. However, unlike the MECSS, the CNCT recommends establishing a tax category for new nicotine products, such as electronic cigarettes, whose rapid development raises a public health issue.