France Rules Out Tax Related Q4 Tobacco Price Rise

Source from:  Tax-News.com 09/09/2013

Contrary to expectations, French Budget Minister Bernard Cazeneuve has announced that tobacco prices in France will not rise after all in October, despite the successive increases that have taken place over the course of the past year, attributable notably to the Government's decision to raise the tobacco tax.

Back in July, reports abounded that tobacco prices would rise by 20 cent from October 2013. Quashing these suggestions, the French Finance Ministry made clear in a recent communiqué that tobacco prices will not rise in October, compared to current prices. Budget Minister Cazeneuve aims to fix quarter four tobacco prices in the coming days, the Ministry said.

Commenting, Cazeneuve confirmed that this "price stability" follows two consecutive rises that have taken place in France, when prices rose by 40 cent in October 2012, and by a further 20 cent in July 2013. The Budget Minister explained that the price hikes were a direct result of the Government's decision to increase the tax levied on tobacco products at the end of last year, within framework of its 2013 Social Security Budget. The tax rise has simply been passed onto consumers, Cazeneuve stressed.

Bercy has confirmed that tobacco sales fell by around 8 percent in the first half of 2013, compared to sales recorded in the first half of 2012. The decline in sales is due to Government action aimed at moderating the consumption of tobacco products, to protect public health, the Finance Ministry emphasized, alluding to its decision to increase tobacco tax to modify behavior. Enditem