IREF, Philip Morris France's spokesperson on tobacco taxation

In a report, IREF echoes Philip Morris France's calls to halt tax increases on tobacco products, on the grounds that this would have little impact on adult smokers. It also echoes the cigarette maker's desire to maintain favorable taxation for emerging tobacco and nicotine products.

The Institute for Economic and Fiscal Research (IREF), a think tank linked to the tobacco industry, published on February 27, 2024 a report funded by Philip Morris France (PMF), entitled “State of smoking in France and international comparisons 2022-2023”[1]. Based on data from the KPMG firm, also financed by PMF, and interpreting in its own way the results of public surveys by the French Observatory of Drugs and Addictive Trends (OFDT), the IREF develops, according to "his independent point of view", the tobacco industry's views on the taxation of tobacco products.

Questions about the validity of KPMG's figures on the parallel market

In its report, the IREF states that "The figures presented are all from official sources". However, on the question of the trade in tobacco products outside the tobacconist network in France, the IREF favours the figures from KPMG studies, financed by the tobacco industry and whose methodology is contested. Although the IREF report mentions other official sources, notably public ones (21 % of purchases outside the tobacconists' network according to Santé Publique France and 14 to 17 % of consumption according to a report from the National Assembly[2]), it only retains the latest KPMG study, which estimates this parallel market at 40 % of tobacco consumption. The IREF sometimes distorts the figures, indicating that the National Assembly report would estimate the parallel market at between 15 and 25 % of consumption.

Furthermore, this report from the National Assembly estimated that three-quarters of this parallel market consists of cross-border purchases, which are not illegal as long as the personal consumption thresholds are not exceeded. Furthermore, these cross-border purchases are made possible by the over-supply of neighbouring countries by tobacco manufacturers, particularly Philip Morris. Based on KPMG figures, the IREF minimises the share of these cross-border purchases and tends to overestimate essentially the share of counterfeit products. Like the tobacco manufacturers and the Confédération des buralistes, the IREF attributes the supposed growth of the parallel market to the tobacco taxation policy in France.

Tax increases effective in preventing youth smoking

The IREF report officially welcomes the drop in smoking observed by the OFDT in France among minorsThe prevalence of daily smoking among high school students thus fell from 17.5 % in 2018 to 6.2 % in 2022, and experimentation with tobacco from 53 % to 34 %.[3].

Patrick Coquart, the editor presenting this IREF report, attributes this decline primarily to awareness-raising actions. However, he acknowledges that "The continued increase in the price of cigarettes is probably also a factor, as young people are particularly sensitive to prices."[4] He fails to mention that recruiting new smokers is a crucial element of the tobacco industry's business model, without which it cannot renew its customer base. One in two smokers dies prematurely from tobacco-related diseases and must therefore be "replaced" by a younger smoker to maintain the market and the industry's profits. Recruiting young smokers thus means that tobacco products remain affordable.

IREF calls for an end to tax increases on tobacco products

While he acknowledges the effectiveness of the policy of high tobacco taxation on young people, Patrick Coquart considers that it has had little effect on the rest of the population, particularly on the poorest smokers. However, the IREF only takes into account the differences between the data from 2000 and those from 2022, a period during which France was characterized by a very fluctuating tax policy, alternating between significant increases and freezes, and limited increases decided by the cigarette manufacturers themselves. Data from Santé Publique France indicate that the large increases in tobacco taxation from 2016 to 2018 had a significant impact on tobacco consumption among the least advantaged social groups.[5].

Still basing themselves only on the smoking prevalence of 2000 and 2022, the IREF projections also estimate that a policy based on tobacco taxation would not make it possible to achieve a smoking prevalence of 5 % until 2110 or 2200. However, they neglect to take into account that the price increases that occurred between 2001 and 2014 were more often initiated by tobacco manufacturers than caused by taxation.[6]. These projections also do not incorporate the recent decline in smoking prevalence among adolescents, which is expected to have a strong impact on tobacco product sales in the coming years.

IREF cites New Zealand as an example of a country with very high tobacco prices that has decided to stop the increases tobacco taxes. He refrains, however, from mentioning that New Zealand, which has long been at the forefront of tobacco control, has just introduced a stop to its entire anti-smoking policy after a change of government that includes a former representative of the tobacco industry.

Two facets of the “British model”

According to IREF, the only policy that could be considered for France would be to follow the British example, in particular by integrating electronic cigarettes into the anti-smoking policy - and by adding heated tobacco, the most profitable product for cigarette manufacturers. However, IREF evades the proposed ban on the sale of tobacco products. to people born after 2009 in England or to tax electronic cigarettes more heavily. He also refrains from recalling that Great Britain is the European country whose tobacco prices have seen the biggest increases, the last in November 2023, to stand today at 18 € per pack.

To learn more about IREF and its offensive on tobacco prices, see our decryption.

Keywords: Institute for Economic and Fiscal Research, Philip Morris France, KPMG, tobacco prices

©Tobacco Free Generation

M.F.

[1] State of smoking in France and international comparisons 2022-2023, IREF, report, January 2024, 24 p.

[2] Information mission on the evolution of tobacco consumption and the yield of taxation applicable to tobacco products during confinement and the lessons that can be learned from it, National Assembly, September 2021.

[3] Use of psychoactive substances among middle and high school students – EnCLASS 2022 Results, OFDT, Report Notes, January 2024

[4] Coquart P, State of smoking in France and international comparisons 2022-2023, IREF, +published on January 27, 2024, consulted on February 28, 2024.

[5] Andler R, Richard JB, Guignard R, Quatremère G, Verrier F, Gane J, Nguyen-Thanh V. Decline in the prevalence of daily smoking among adults: results of the 2018 Public Health France Barometer. Bull Epidemiol Weekly. 2019;(15):271-7.

[6] Taxation and public health: state of play of behavioral taxes, Senate, Information Report No. 399 (2013-2014), filed on February 26, 2014.