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France's smokers take a hit as tax hikes begin

GettyImages/Tim Bieber

Smokers in France ready themselves to feel the pinch, as a tax on tobacco goes into effect. Starting tomorrow, nary a pack of cigarettes will be found for less than six euros. The government is hoping for big savings as a result.

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The tax on manufactured cigarettes as well as roll-your-own will go up by 6.5 percent on Monday, in an increase that hasn’t been seen in France since 2004. The tax hike translates to 40 cents more per pack, with the cheapest at 6,10 euros and the most expensive coming in at more than seven euros.

“Our predecessors had planned on this increase but we’re instating it because an agreement has finally been reached between the state and tobacconists,” said Budget Minister Jérôme Cahuzac on French radio on Sunday.

The increases will put an estimated one billion euros back into the government’s pocketbook. In 2011, tobacco was taxed at 80 percent, which contributed 13.8 billion euros to France’s public finances.

While the tax hike will mean big savings for the state, it could affect sales in France’s “tabacs” or tobacco shops, which are something of a mainstay of French culture.

Many in the industry worry that smokers will go across the border to find cheaper packs. Some of France’s neighbours offer cigarettes for nearly two euros less, with Italy and Luxembourg selling packs for 4,90 euros and 4,40 euros, respectively.

Already, an estimated 20 percent of France’s smokers buy their cigarettes outside of the country.

However, Cahuzac didn’t rule out the possibility of pushing up tobacco taxes even more in the future.

“It is very possible that in the next five years, the price of tobacco will go up, as part of a national public health scheme,” said Cahuzac.

France’s tobacco sales may also feel the pressure from Brussels soon, where a European anti-tobacco directive is in the making. It would force cigarette packs to be sold without logos or brand names, and limit or ban cigarette displays in tobacco shops.

Each year, tobacco is responsible for 73,000 premature deaths in France.

 

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