Tobacco prices: the industry lobby leads the offensive in France

April 14, 2021

Par: National Committee Against Smoking

Dernière mise à jour: July 8, 2024

Temps de lecture: 26 minutes

Prix du tabac : le lobby de l’industrie mène l’offensive en France

On March 17, 2021, the Institute for Economic and Fiscal Research (IREF, or the Institute), a think tank neoliberal, publishes a study funded by Philip Morris France entitled “Rethinking the taxation of new tobacco and nicotine products to fight against smoking”. This publication, relayed by Les Echos without mention of its financier, although presented as representing "the independent point of view of the think tank", turns out to be a plea in favor of a paradigm shift on the taxation of tobacco and nicotine products, which is placed in the context of a concerted offensive on the part of the tobacco industry in terms of tax regulations.

IREF: a think tank looks like a front group

IREF presents itself as a think tank – or circle of reflection – European of liberal persuasion. Created in 2002, it positions itself in its own words as being “for economic freedom and tax competition”[1]. The Institute, seeking to be “independent of any political party or organization”, seeks to influence public debate, particularly on economic and fiscal issues. It is in the vein of neoliberal organizations, working in favor of the business world, a drastic reduction in state intervention and general tax relief. On its website, the think tank formulates ten reform proposals, among which we find the abolition of the civil service status, the privatization of HLM, the opening of health insurance and unemployment insurance to competition, or even the abolition of public subsidies for unions.

It is today chaired by Philippe Delsol, tax lawyer in the company Delsol Avocats, who, according to Wikilibéral “provides advice and monitoring to many French people wishing to transfer their domicile abroad”[2]. In 2019, Philippe Delsol published his latest book, In Praise of Inequality.

An organization with opaque funding

While the Institute aims to influence the debate and public decision, no information is given by it on the question of its financing, which is exclusively private. In their latest edition of 2017, the European Observatory of think tanks evaluates French think tanks based on several criteria, such as governance or transparency. For this last criterion, IREF is in last place of the 53 think tanks, with the lowest rating that can be assigned[3].

The opacity of a think tank on its financing is particularly problematic, since it prevents the identification of possible links and conflicts of interest with which it may be confronted, and calls into question the independence of its publications, which may be subject to corporate interests. In other words, it is accepted that the level of transparency of a think tank is a good indicator of one's actual level of independence[4].

A pro-tobacco industry positioning

On the issue of tobacco, the Institute has published several articles, all devoted to the issue of tax increases. Not surprisingly, the think tank Ultra Liberal vigorously opposes tax policies in matters of public health, taking up the main arguments mobilized by the tobacco industry itself. Thus, according to IREF, tax increases would be part of a “paternalistic” logic, the effects of which would be “counterproductive”[5], since their sole consequence would be to boost illicit trade. Thus, instead of reducing tobacco consumption, price increases would result in a reduction in tax revenues.

Who is the author of the study?

The study in question was written by Patrick Coquart, who presents himself as an “expert in human resources and management”[6]. With a Master's degree in Social Policy, he has no particular expertise in tobacco or taxation, and, to our knowledge, has no previous publications to his credit on the issue of tobacco. A regular contributor to the liberal newspaper Contrepoints, Patrick Coquart positions himself more as a "consultant in management, human resources, social relations and communication"[7], but also as a penholder for "organizations, companies, individuals to help them produce original editorial content." On his blog, Patrick Coquart engages in very personal analyses of current events, comparing the ecological proposals of the Macron five-year term to Nazi and Soviet totalitarianism.[8], and the Real Estate Wealth Tax (IFI) to a “massacre of owners”, and a “spoliation worthy of the USSR”[9]. Finally, Patrick Coquart is also an “associate researcher” for the Molinari Institute, think tank identified by GST as a front group dedicated to the defense and promotion of the interests of controversial industries, such as the tobacco industry or the hydrocarbon industry.

 

What does the study say?

While this study was "carried out thanks to funding from Philip Morris France", the mention of the tobacco company's participation in its development only appears at the end of the document, and is not indicated in the newspaper Les Echos, which nevertheless relayed the main conclusions.

According to the author of the study, public health policies, particularly through tax increases applied over the last two decades, have limited effectiveness, as demonstrated by the allegedly poor figures for tobacco consumption in France. The study advances the need to base public policies on “risk reduction”, rather than on “banning, taxation and blaming consumers”. Thus, this reduction of risks would be embodied by the new tobacco and nicotine products, certified by the management consultant as an effective means of combating smoking.

Therefore, given their supposed less harmfulness, Patrick Coquart pleads in favor of preferential taxation for new tobacco and nicotine products, in order to encourage a transfer of consumption towards these new devices, like French taxation policies intended to encourage the development of electric cars. Furthermore, the study underlines the need for the establishment of an “independent scientific committee”, aimed at evaluating the harmfulness and “benefits” of tobacco and nicotine products, by assigning them a “Noci-score », like the Nutri-score in the agri-food industry. The evaluation of the levels of harmfulness of products is then intended to be used to determine the levels of taxation. This independent scientific committee must, however, not only be composed of doctors and tobacco control organizations, but should include “a maximum […] of points of view”, including tobacconists, or “experts from the tobacco industry” (sic). Finally, IREF proposes to block any increase in taxation and any change in regulations for the next five years. Unsurprisingly, this suggestion is officially motivated by the need to preserve the purchasing power of the poorest, or to fight against illicit trade.

 

Analysis of the study

This document, based on inaccurate postulates, multiplying approximations, errors of interpretation and untruths, is more of a propagandistic register than that of a scientific study, as can be seen by analyzing its main points. .

I. Are tax increases ineffective?

Much of the reasoning of the think tank is based on the postulate that public health policies, embodied by tobacco tax increases, are ineffective. In reality, all independent scientific research agrees that tax increases remain the most powerful lever for reducing a population's tobacco consumption.[10]. To be effective, these increases must be significant, repeated and without interruption, and accompanied by additional measures, in particular cessation assistance (reimbursement of care, nicotine patches, awareness campaigns, etc.). THE think tank also illustrates the ineffectiveness of tax increases by the increase in smoking prevalence observed in France between 2005 and 2010, when this period was precisely characterized by a tax freeze on tobacco products. The implementation of the taxation campaign in France made it possible to reduce smoking prevalence by 5.4 points between 2016 and 2019, from 29.4% to 24%[11].

II. Do tax increases cause illicit trade?

On numerous occasions, the study points out the supposedly counterproductive nature of tax increases, accused of encouraging illicit trade, and in particular, counterfeiting. For the author, the application of high taxation even tends to encourage insecurity, crime and terrorism. These arguments have no scientific validity, since studies show no correlation between taxation levels and levels of illicit trade.[12][13]. Furthermore, the study, funded by Philip Morris France, fails to mention that the tobacco industry is still massively involved today in the organization and facilitation of global illicit trade.[14]. There is a growing body of evidence that demonstrates that organized cigarette smuggling benefits many criminal and terrorist organizations and contributes to the destabilization of entire regions, such as West Africa.[15]. Illicit trade levels are also largely overestimated by the tobacco industry to dissuade policy makers from increasing taxes. In France, illicit trade is estimated at 6% of the national market[16], while counterfeiting levels are residual (0.2%), according to tobacco company Imperial Brands' own internal quantitative study[17].

III. Do tax increases penalize the poorest?

For the author of this study, tax increases would be regressive and would especially penalize the poorest. Once again, scientific studies show the opposite. Tax increases are in fact all the more effective in reducing the smoking prevalence among young people and working-class categories, who are more sensitive to the price argument. While precarious populations are the first victims of smoking, tax increases thus contribute to repairing social inequality in public health.

 

IV. Electronic cigarettes and heated tobacco: risk reduction tools?

If the author of this study makes a distinction between new nicotine products (electronic cigarettes) and new tobacco products (heated tobacco), she does not make a difference between these two types of products, which are presented as risk reduction tools.

The electronic cigarette: focus

From a public health point of view, however, it is imperative to treat these two types of products separately. Electronic cigarettes are not innovations initially driven by the tobacco industry. Although the effects of their long-term consumption remain uncertain, electronic cigarettes do indeed appear less harmful than manufactured cigarettes in the short term. Furthermore, the effectiveness of using electronic cigarettes to quit smoking in the long term remains uncertain and needs to be supported by well-conducted prospective scientific studies. However, the tobacco industry, through massive investments, seeks to take control of this relatively recent market, and deploys large-scale marketing strategies aimed at targeting younger generations, and introducing them to consumption, and therefore to perpetuate nicotine addiction, the keystone of the economic survival of tobacco companies.

Heated tobacco: focus

Heated tobacco, on the other hand, is an innovation driven by the tobacco industry. Contrary to what the study and the manufacturers claim, no independent study has been able to demonstrate that the consumption of heated tobacco is correlated with a reduction in risks for the smoker.[18]. Some toxic particles are actually found at lower levels in heated tobacco aerosol than in manufactured cigarette smoke. On the other hand, for other toxic or potentially toxic particles, the levels are higher. According to independent studies, it is likely that the consumption of heated tobacco can cause illnesses that the consumption of conventional cigarettes does not cause. In all cases, it has been established that heated tobacco is “considerably more harmful than electronic cigarettes”[19]. Ultimately, its consumption is accompanied by a modified risk, not a reduced risk[20]. In this way, the promotion of heated tobacco is incompatible with public health. Furthermore, heated tobacco, designed to deliver a nicotine level equivalent to that of a conventional cigarette, cannot be understood as a cessation tool. Studies also show that the consumption of heated tobacco overlaps with that of manufactured cigarettes (among 69% of consumers). Finally, heated tobacco would be more of an entry point into smoking (20%) than an exit route (11%). In total up to 45% of heated tobacco consumers are non-smokers[21].

 

V. Taxation of new tobacco products: a survival issue for manufacturers

The argument of risk reduction is used by the tobacco industry to seek advantageous taxation for heated tobacco. However, this product, classified in the tax category of “other smoking tobacco products”, already benefits from great, unjustified advantages in terms of taxation, compared to manufactured cigarettes.

At 1er January 2021, a pack of 20 Marlboros costs 10.50 euros retail. By deducting the various taxes (consumption duties and VAT), as well as the gross discount intended for the tobacconist, this package brings its manufacturer 0.67 euros[22]. If we take a pack of 20 Heets mini-cigarettes, manufactured by PMI and intended for heating tobacco, its retail price on the same date amounts to 7.50 euros. By deducting these same taxes and the share allocated to the tobacconist, each pack of Heets brings the manufacturer 1.49 euros. So, while a pack of Heets is 29% cheaper than a pack of Marlboros, its profit margin is 121% higher.

This calculation allows us to understand the tobacco industry's interest in promoting heated tobacco. If it is not a risk reduction tool, it has beneficial potential for manufacturers, faced with the global decline in tobacco consumption throughout the world.

 

VI. “Risk Reduction” as a Public Relations Operation and Marketing Strategy

In addition to this mercantile dimension, the exploitation of the notion of risk reduction by the tobacco industry is a technique that it uses to improve its image and seek to establish itself as a credible public health actor among decision-makers. as potential consumers. Through this, tobacco companies aim to establish themselves as a partner in the development of public health policies and in the regulatory process. Ultimately, the promotion of these new products aims to bypass current public health measures, considered obsolete and less effective than the “solutions” proposed by tobacco companies. This is precisely the meaning of the IREF study, which suggests that a tax policy favorable to tobacco products would be more beneficial to public health than tax increases on all tobacco products.

The discourse on public health is limited to a public relations operation. In fact, wherever they can, tobacco companies implement aggressive marketing strategies intended to promote smoking, particularly targeting younger generations.

VII. Proposals contrary to France's international commitments

For the author of the study, public policies must therefore allow tax reductions, in order to “promote reduced risk products”, assimilated to tools beneficial to public health. In reality, in its guiding principles, the WHO Framework Convention on Tobacco Control (FCTC), ratified by France in 2004, highlights the need for different governments to “reduce the consumption of tobacco products under all their forms”, thereby including heated tobacco. Furthermore, the legally binding global public health treaty underlines the importance of public policies "not being influenced by the commercial interests [...] of the tobacco industry", and of "developing appropriate policies to prevent and reduce tobacco consumption, nicotine addiction and exposure to tobacco smoke. In other words, the establishment of tax incentives in favor of heated tobacco products is contrary to France's commitments in terms of public health. These obligations are based on the principle of the existence of a “fundamental and irreconcilable conflict between the interests of the tobacco industry and those of public health”.

 

The proposals of think tank : opportunity analysis

In conclusion of this study, the IREF puts forward several proposals, judged by the author to be able to reduce tobacco consumption, which it is interesting to analyze from a public health perspective:

 

PROPOSAL 1 : An independent scientific assessment to determine the risk of tobacco and nicotine products, and therefore their level of taxation. As said above, the think tank proposes to involve in this committee all stakeholders, smokers, tobacconists and “tobacco industry experts”, in order to allow the expression of “maximum expertise and points of view”.

Analysis : This proposal is in contradiction with its official objectives. In other words, the presence of tobacco manufacturers and their allies in this committee would in fact be irreconcilable with its claim to independence. The particularly generous acceptance of this notion made here may question the conclusions of this study financed by Philip Morris, but whose think tank assures that it “represents[..] his independent point of view”.

The participation of the tobacco industry in this type of committee, incompatible with the requirements of the FCTC, has the sole purpose of allowing tobacco companies to impose their agenda, delay, block, or empty decisions of their substance, and to 'use the audience that these committees give them to disseminate their disinformation. Furthermore, their presence on these committees is then exploited, particularly in developing countries, to present themselves as credible partners to public authorities.

 

PROPOSAL 2 : The attribution of a Noci-score, like the Nutri-score in the food industry, to tobacco and nicotine products, based on their dangerousness, and their potential “benefits for human health” .

Analysis : Such a proposal seeks to encourage consumers to shift their consumption to less harmful tobacco and nicotine products. This is a false good idea. Unlike the food industry, there are no tobacco or nicotine products that are safe for health. This proposal illustrates the lack of perspective of this study: no other over-the-counter product has levels of danger equivalent to those of tobacco, which therefore require specific and restrictive measures, like the health warnings and illustrations on the package. neutral, or the prohibition of any form of advertising, promotion and sponsorship. By wanting to transpose agri-food measures to tobacco, we are denying the latter the unprecedented scale of its impact on public health. However, the normalization and trivialization of smoking is one of the priority objectives of tobacco companies.

 

PROPOSAL 3 : Implement tax simplification for all tobacco products. THE think tank proposes in particular to review tax structures, by giving them only two variables: one based on weight, and one on the dangerousness of the product. The author also puts forward the advisability of preferring specific taxes to proportional taxes. For the author of the study, the application of this new tax system should be characterized by a general reduction in taxes on tobacco and nicotine products, followed by a tax and regulatory freeze over a period of five years.

Analysis : This IREF proposal is fully in line with the economic interests of the tobacco industry in general, and those of Philip Morris International in particular. First, the reduction or blocking of tax levels is a priority issue for the sustainability of tobacco companies: each time such a blocking has taken place in the past, and in particular during the tax moratorium from 2005 to 2011, the reduction of consumption caused by prevention measures has been stopped and consumption by young people has started to rise again

Furthermore, IREF's request to match taxation to weight rather than to the number of units is a strategy to obtain advantageous taxation for heated tobacco. If mini-cigarettes are taxed individually, a pack of 20 Heets is taxed at the same level as a pack of 20 Marlboros. On the other hand, if these mini-cigarettes are taxed by weight, they consequently become less taxed than traditional cigarettes.

Finally, IREF, by proposing to favor a specific excise, agrees with the position of Philip Morris on the question of the structure of taxes. The specific excise functions as a fixed monetary tax per cigarette, regardless of the base price, effectively reducing price differences between brands, to the benefit of the more expensive, high-end brands.

 

PROPOSAL 4 : Allowing a tax alignment of heated tobacco, presented by the think tank as a less toxic product, compared to that of the electronic cigarette.

Analysis : As demonstrated above, no independent study shows that the consumption of heated tobacco presents fewer risks than that of manufactured cigarettes. On the other hand, heated tobacco is considered “considerably more harmful than electronic cigarettes”. Likewise, this proposal is contrary to the requirements of the FCTC, ratified by France.

Taxation that encourages consumers to switch to these new products would result in significant losses of tax revenue. If the purpose of taxation is to dissuade people from starting smoking, it is also intended to compensate for the major costs for the community that the consumption of these products causes.

 

PROPOSAL 5 : Establish a differential insurance system, allowing insurance companies to take into account the smoking status of individuals. Thus, smokers, with a riskier profile, would see their contributions increase, thus allowing them to be “responsible”.

Analysis : This measure is in contradiction with the criticism of the IREF, accusing tax increases of penalizing poor smokers. This proposal, if implemented, would have the first consequence of considerably increasing insurance costs for smokers. Finally, this measure may appear all the more unfair as it only measures smoking in terms of demand. For the think tank, the question of tobacco control rests solely with the smoker, who is solely responsible. However, tobacco being a market, this study omits that it is also dependent on supply, falling under the responsibility of the manufacturers. As such, smoking is recognized by all public health stakeholders as being an industrial epidemic, that is to say as an epidemic maintained and disseminated by tobacco manufacturers.

 

A concerted lobbying strategy in France

The publication of this study, whose postulates and conclusions faithfully reflect the objectives of the tobacco industry in terms of taxation, comes shortly after the launch by the Finance Commission of the National Assembly of a mission of information on “the evolution of tobacco consumption and the tax yield applicable to tobacco products during confinement and the lessons that can be learned from it”. Thus, this mission officially aims to assess the weight of the parallel market in France, and to propose solutions to reduce the phenomenon. In other words, it is the question of taxation of tobacco products which is targeted by this mission.

At the same time, the tobacco industry is deploying a public relations strategy with French parliamentarians, by communicating about the proclaimed explosion of counterfeit products on the French market. As was said above, counterfeiting, in France as elsewhere, is at residual levels. The manufacture of tobacco products requires specific equipment and ingredients (machines, boxes, filters, tobacco), the acquisition of which, outside of legal manufacturers, remains suspect. The overestimation of the counterfeiting phenomenon is in reality a strategy of the tobacco industry, intended to divert attention from contraband, in which tobacco companies are massively involved. Furthermore, counterfeiting allows manufacturers to appear as victims of illicit trade, when they are the main beneficiaries.

The tobacco industry finally exerts strong pressure on the National Assembly, through amendments brought by deputies identified as being close to the manufacturers, like Charles de Courson or Lise Magnier. These two parliamentarians thus tabled an amendment in October 2020 proposing a tax reduction in favor of heated tobacco, also promoted as a risk reduction tool, and in a stated concern for public health. In the same way, in November 2018, MP Christophe Blanchet tabled an amendment, announcing that it was "proposed by Philip Morris" and aimed at better combating the phenomena of street sales and counterfeiting in large cities, which have been singled out to maintain a climate of insecurity.

Thus, all of these observations lead us to believe that the tobacco industry is implementing a concerted lobbying strategy with the aim of obtaining advantageous taxation for its heated tobacco products, within the framework of the next revision of the European Directive on tobacco products, of which the IREF study is one of the manifestations.

  ©Tobacco Free Generation
[1] IREF, Presentation and expertise, 03/05/2013, (accessed THE 31/03/2021)

[2] Wikiliberal, Jean-Philippe Delsol, (accessed 31/03/2021)

[3] European Observatory of Think Tanks, France of think tanks. Results and analysis of the “think tank and transparent France 2017” label, December 2017

[4] The OBS, Institut Montaigne, Terra Nova, Iris… Who funds think tanks?, November 19, 2013, (accessed 03/31/20121)

[5] Challenges, Tobacco: why the increase in taxation is counterproductive, January 4, 2017, (accessed 03/31/2017)

[6] The pen without the mask, Patrick Coquart's blog, Who am I ? (accessed 03/31/2021)

[7] Molinari Institute, Patrick Coquart, (accessed 31/03/2021)

[8] The pen without the mask, Patrick Coquart's blog, The Macronian youth are “On the Move”, (accessed 03/31/2021)

[9] The pen without the mask, Patrick Coquart's blog, The massacre of owners in Mr. Macron’s France, (accessed 31/03/2021)

[10] Bader P, Boisclair D, Ferrence R. Effects of tobacco taxation and pricing on smoking behavior in high risk populations: a knowledge synthesis. Int J Environ Res Public Health. 2011;8(11):4118-4139. doi:10.3390/ijerph8114118

[11] BEH Public Health France - 2020

[12] Chaloupka FJ, Straif K, Leon ME. Effectiveness of tax and price policies in tobacco control. Tob Control. Published Online First: 29 November 2010. doi:10.1136/tc.2010.039982

[13] Joossens L, Raw MCigarette smuggling in Europe: who really benefits? Tobacco Control 1998;7:66-71.

[14] Gilmore AB, Gallagher AWA, Rowell A. Tobacco industry's elaborate attempts to control a global track and trace system and fundamentally undermine the Illicit Trade Protocol. Tob Control. 2019 Mar;28(2):127-140. doi: 10.1136/tobaccocontrol-2017-054191. Epub 2018 Jun 13. PMID: 29899082; PMCID: PMC6580790.

[15] OCCRP, British American Tobacco Fights Dirty In West Africa, February 26, 2021 (accessed 03/31/2021)

[16] Lalam N, Weinberger D, Lermenier A, Martineau H, Observation of the illicit tobacco market in France, French Observatory of Drugs and Addiction, June 2012

[17] Younous Omarjee, The black book of the tobacco lobby in Europe, 03/09/2018

[18] Dautzenberg B, Dautzenberg MD. Heated tobacco: systematic review of the literature [Systematic analysis of the scientific literature on heated tobacco]. Rev Mal Respir. 2019 Jan;36(1):82-103. French. doi: 10.1016/j.rmr.2018.10.010. Epub 2018 Nov 11. PMID: 30429092.

[19] Dusautoir R, Zarcone G, Verriele M, Garçon G, Fronval I, Beauval N, Allorge D, Riffault V, Locoge N, Lo-Guidice JM, Anthérieu S. Comparison of the chemical composition of aerosols from heated tobacco products, electronic cigarettes and tobacco cigarettes and their toxic impacts on the human bronchial epithelial BEAS-2B cells. J Hazard Mater. 2021 Jan 5;401:123417. doi: 10.1016/j.jhazmat.2020.123417. Epub 2020 Jul 7. PMID: 32763707.

[20] Glantz SA, Heated tobacco products: the example of IQOS, Tobacco Control 2018;27:s1-s6.

[21] Ibid

[22] Customs, Taxation applied to manufactured tobacco, January 29, 2021, (accessed 03/31/2021)

 

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