Tobacco Firms: New law Could Hurt Economy

Source from:  Budapest Business Journal 12/18/2014

The law on a single centralized tobacco distribution company, which was approved by the Parliament on Monday, carries substantial economic risks, tobacco companies said in a joint statement yesterday.

The statement was sent to Hungarian news agency MTI by BAT Pécsi Dohánygyár, Imperial Tobacco Magyarország, JTI Hungary and Philip Morris Magyarország.

It opposed the new law, under which the state will either establish or designate a single firm to distribute tobacco in Hungary.

According to the tobacco companies, the approved measures clearly serve as a bad example for foreign-owned companies considering investments in Hungary, and it will have a substantially negative impact on the Hungarian economy. The statement maintained that lay-offs will follow and added that the state could lose tax revenues with the black market gaining ground.

A union representative made a similar claim yesterday, when he told the BBJ that the law would cost about 1,200 jobs.

The establishment of the centralized distributor is expected to result in the elimination of the direct tobacco product sales systems, which have been successfully operated by industry players, the statement said, adding that increasing the sales margin could indirectly support the black market, the ratio of which already exceeds 50% in certain locations in Hungary.

The tobacco companies added that it is also questionable whether the new regulation complies with European Union and Hungarian regulations. Enditem