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The minimum price of cigarettes in italy set by the state

Why is smoking cigarettes so popular in europe? (places, train, uk) page 4 city-data forum

The Minimum Price for cigarettes obliges the manufacturers of lower cost cigarettes to raise their prices to a minimum set by the State.

In theory, they would earn more but in fact this does not happen, because consumers, choosing from a selection of products having the same price, are led to choose the better known and more advertised brands. Any economical cigarettes on the Italian market today, because of this law, will have to cost the same as Winstons or Pall Malls.

So, this increase to the minimum price does not help local manufacturers, nor does it bring greater income to the State it only boosts the turnover of the cartel of the multinational giants. If there had been, instead, a generalized tax increase on all cigarette brands, the State would have benefited from higher revenues and the big cigarette multinationals would have had to reduce their profits to remain competitive.

The reaction of Yesmoke and of the European Commission

On October 5th 2007, Yesmoke presents a petition to the European Commission for the abolition of the minimum price, and on the 3rd of July 2008, the European Commission refers Italy to the Court of European Justice.

The EU Violation Procedure is activated when it is believed that a Member State has violated an obligation imposed by Community law. It can be invoked by the European Commission (article 226 the EC Treaty) or by any Member State against another Member State (article 227 of the EC Treaty).

Taxation has the same effect on prices as a mandatory minimum price, and it doesn’t damage the competition on a price basis, points out the European Commission communication.

If today’s prices of cheaper cigarette brands were determined by higher taxes, the cigarettes would cost the same as they do today, but the State would make about 1.5 billion euro more each year and Philip Morris would find itself in an extremely critical situation.

Chronology

• July 2, 2007 The European Commission has officially announced that it is ready to undertake legal action against Italy (as well as Austria and Ireland), for the decision to fix a minimum price for cigarettes as a measure to dissuade smokers, instead of using the instrument of taxation
• October 5, 2007 Yesmoke submits a notification to the European Commission concerning the minimum price for cigarettes in Italy
• July 3, 2008 The Commission has decided to refer Italy to the Court of Justice, concerning the minimum price of cigarettes
• June 26, 2008 The press realase is published on the official website of the Europea
• June 10 December 18, 2008 Yesmoke challenges the latest two provisions made by the Italian monopoly for the increase of the cigarette minimum price
• January 28, 2009 The regional administrative court of law of Lazio agrees with Yesmoke and suspends the latest 2 provisions about the increase of the cigarette minimum price Yesmoke can decrease te price from 3,60 euro for 20 sigarette, to 3,40 euro
• March 12, 2009 The Council of State sustains the petition of provisional precautionary measure Misura cautelare provvisoria, which suspends the order of the TAR of Lazio. Yesmokes return to 3.60 euro
• April 7, 2009 The Consiglio di Stato conferms the suspension of the provision of the TAR del Lazio of January 28. The Yesmoke, at the moment, cannot be sold at 3.40 euro
• May 13, 2009 TAR Lazio The definitive decision of the TAR for the abolition of the minimum price has been postphoned to November 25, 2009
• November 25, 2009 Hearing at TAR Lazio
• January 26, 2010 The sentence Il TAR The TAR does not reject Yesmoke s requests and defers the trial, awaiting the imminent abolition of the minimum price by the European Court of Justice
• June 24, 2010 The sentence The European Court of Justice abolishesh the minimum price in Italy
• April 5th, 2012 the TAR of Lazio revokes the DL 94, the minimum tax.

Getting around the Court Sentence, the Minimum Tax

While the European Court sentence was enacted regularly in France, Ireland and Austria, in Italy it was not. On the 23rd of June 2010 the DL 94 Tassa minima was passed to circumvent the judgment of the Court of Justice scheduled for the next day. The new “minimum tax” did not affect anyone, because if a cigarette maker wanted to lower his prices below the 3 euro and 80 cents of the old minimum price (just abolished by the European Union), he would find a tax that would force him to sell below cost. Since selling tobacco below cost is prohibited, no one could reduce his prices and so no one would ever pay the tax. If he did, he would be violating Article 39 quater, paragraph 2, of Legislative Decree 26 October 1995, n. 504, which prohibits the sale of tobacco products below cost.

The minimum tax was devised to neutralize the effects of the abolition of the minimum price. It was implemented to satisfy the foreign tobacco multinationals who do not like higher taxes and consequent lower profits.

The minimum tax would be annulled on April 5, 2012 by the TAR of Lazio.

Yesmoke’s comment

The interests in play are now all foreign the manufacturers, the brands of cigarettes of the ex State Monopoly and Logista, foreign too, the only distributor.

There is practically no one left that is Italian, and the Italian State is paying the defense for foreigners, against Italy s own interests, considering that

1. The State collects less with the minimum price
2. The State will be condemned to pay compensation to Yesmoke because of the minimum price
3. The State with the State Advocacy Avvocatura dello Stato paid with public funds, is defending the interests of foreign companies these companies have already been condemned for smuggling and tax evasion (with final sentence) and they continue to elude taxes in Italy with total impunity.

So the Italian State is a loser three times. In this picture, Yesmoke is substituting the State and, alongside the European Union, the company is also fighting a battle against the State, so that the State itself, eliminating the obstacle of the minimum price, can increase its fiscal revenues and not leave all these funds to foreign manufacturers.

Yesmokes position coincides with that of the European Commission. The Italian minimum price policy will very likely lead to the shutdown of any company that attempts to enter the market.

Philip Morris has always done all it could to neutralise the so called economical brands using every possible means. These include, as in this case, the imposition of its concept of price increases that ends up raising the prices only of the economical cigarettes so that they will no longer be Economical.

A producer who reduces his prices is not encouraging people to smoke more. In fact, he is creating a base on which the State can increase taxes and its fiscal revenues for the benefit of all of us. To try to make people smoke less, which measure is fairer a price increase or a tax increase? Whom would you prefer to give your money to to foreign tobacco giants or to your own country?

The Political Price

Today Philip Morris earns with its Marlboros almost as much as the tax collector and taking advantage of all these profits is an army of mysterious backers and parasites of all species and of all political colors. Against the profit that cigarette manufacturers are raking in today, totally unjustifiable and unthinkable in any other trade sector, Yesmoke is going to take a strategic and demonstrative stand it is going to introduce onto the cigarette market a product of top quality practically at production cost the so called Political Price.

At this point, the Italian State will have to bring cigarette prices to a level judged useful to dissuade tobacco consumption, and it will do this by raising taxes on all cigarettes. So, finally the prices of all the brands will rise, taking Yesmoke price as reference point, and Big Tobacco, to remain competitive and to not lose market share, will be forced to either
raise its prices or lower its profits.

Learn More

• The Minimum Price Tremonti, why did you do it?
• The Minimum Price Abolition, the Italian Way
• A New Tax with a Surprise Nobody will Pay it Except Yesmoke
• Fare futuro For a future as servant
• The cigarette swindle A test for Monti
• Ordinanza del TAR 00148 2010
• Ordinanza del TAR 00150 2010
• Sentence Austria, March 4 2010
• Sentence France, March 4 2010
• Sentence Ireland, March 4 2010
• Sentence Italy, June 24, 2010
• Conclusioni dell’Avvocato Generale della Corte di Giustizia 22/10/2009
• C 571 08 Action brought on 22 December 2008 Commission of the European Communities v Italy
• C 221 08 Action brought on 22 May 2008 Commission of the European Communities v Ireland
• C 197 08 Action brought on 14 May 2008 Commission of the European Communities v Republic of France
• C 198 08 Action brought on 14 May 2008 Commission of the European Communities v Republic of Austria