Tobacco: Parallel trade has exploded in France since Covid

So many tobacco sellers didn’t escape from the arms of the people who smoke. In 2021, in line with KPMG, greater than a 3rd (35%) of cigarettes consumed in France have been bought exterior the authorized circuit, ensuing in… 83% tax avoidance. According to Eric Worth’s report back to the Finance Committee of the National Assembly, in the course of the captivity of 2020 alone, about three billion euros thus defaulted in the general public treasury.

“The parallel trade in cigarettes has exploded with the epidemic,” KPMG mentioned. “And this may proceed for a number of years due to the fixed rise in the value of 1 euro per yr,” warned Jean-Poles, president of Philippe Morris France (Marlborough). Most (29%) of this exercise is prohibited and comes from smuggling and counterfeiting. The KPMG report mentioned cross-border purchases accounted for under 6% of 29%, whereas fraud was solely 15%.

A juicy visitors

“In Kovid’s time, traffickers might now not import cigarettes from overseas. As a outcome, they started manufacturing in France. The police have simply demolished one in every of their factories in Mক্সxico, “added Philippe Morris, president of France. Such factories function 24 hours a day for 2 to a few months constantly. These are generally made in the soil with every kind of mixtures, ”he famous.

Production prices are minimal (between 80 cents and 1 euro per package deal), and trades are extremely worthwhile relying on the package deal bought between 3 and 4 euros. The fines for drug trafficking are considerably decrease which contributes to the strengthening of the mafia’s curiosity in cigarette trafficking.

The French smoke greater than different Europeans

Philippe Morris despatched “a hazard sign” to France and referred to as for a change of coverage in France. “The French tax price is the best in all of Europe. Prices too, which in no means lowered the incidence of smoking. On the opposite hand. More than one in 4 French folks smoke every single day. This is greater than some other European nation, ”Jean-Paul continued. In 2021, tobacco gross sales fell 6%, however cigarette use elevated 1.6%.

In addition to imposing a tax on cigarettes, a European directive is being developed on so-called reduction-risk merchandise as a result of they keep away from combustion recognized as a carcinogenic issue. The identical is true of digital cigarettes and heated tobacco.

Some European nations have already got taxes proportional to the estimated threat of every division. This will not be the case in France. The pointers, which intention to not regulate taxes, ought to, however, consolidate the definition of product division from one member nation to a different. Today, e-cigarettes in France carry solely VAT. And scorching tobacco is taxed like tobacco.

“We should combine these new merchandise into the reflection of apply and the evolution of taxation,” Jane Pauls mentioned. The smoking price in the UK has dropped from 25% to 12% in ten years. For Philippe Morris France, there is no such thing as a doubt that “it is a speech by a authorities official on the low threat of e-cigarettes that has made it potential to scale back cigarette use throughout the channel.”

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