[Intl-tobacco] EU to level tobacco duties to stop smuggling

[Robert Weissman]

Brussels to level tobacco duties
by HELEN STUDD
Source: Times Of London, Friday, 3/16/01

THE European Commission is planning to impose a minimum rate of duty on
cigarettes and tobacco sold in its 15 member states in an attempt to stamp
out tobacco smuggling.

Brussels is planning to bring all EU countries into line by 2002. The
minimum rate, about 80p on a packet of 20 cigarettes, is expected to help
to even out the differences in tobacco tax.

If approved, it will almost certainly mean higher prices in five EU member
states — Spain, Greece, Italy, Portugal and Luxembourg — and provide less
incentive for Britons to cross the channel to load up with cheaper
tobacco.Variations in prices across Europe are said to have cost
governments within the EU billions of pounds in lost revenues.

Smuggled cigarettes add up to at least 20 per cent of the British tobacco
market and the Government is predicting that it could rise to 40 per cent
within the next three years. A recent survey found that 40 per cent of
discarded cigarette packets retrieved from football matches at British
grounds were imports.

“These were bought cheaply on the Continent which means the UK Treasury is
losing revenue,” a spokesman for the Commission said. He added that
bringing the rates of other countries closer to the British level would
“significantly reduce the incentive for smuggling between member states”.

Tobacco manufacturers attacked the minimum tax proposals, claiming that
the higher prices would only encourage cross-border smuggling from eastern
Europe.  David Davies, vice-president of corporate affairs for Philip
Morris Europe, described the plan as “simply unrealistic”.