The Belgium government reported yesterday an increase of 123,8 million euros of excise receipts from tobacco, which amount to 2,373 billion euros in 2018. This increase is partly due to higher prices in neighbouring countries, such as France where cigarettes packs increased by around 1 euro.
This increase of government revenues follows difficult years for the Belgium government, which recently suffered from severe fiscal shortfalls due to poorly-conceived tax policy on fine-cut tobacco. As demonstrated in the 2018 London Economics Study, Belgium has implemented sharp increases in tobacco excise duties (up to 17-19% in 2016-2017) since 2013, which heavily impacted domestic duty-paid sales and significantly reduced taxation receipts. In 2016 excise duties were increased to raise revenues, but there was a fiscal shortfall of almost 5% (€3.087 billion instead of the expected €3.238 billion). By 2017, tobacco duties had further declined to €3.004 billion, thereby exacerbating the fiscal shortfall.
Matthew Offord, UK Conservative MP and chairman of the Illicit Trade All-Party Parliamentary Group, mentioned cigarettes in a recent article warning about the proliferation of illicit goods at Christmas. He reminded readers that the illicit cigarette trade was linked to more serious organised crime, such as drug and human trafficking. Read More
ESTA is pleased to announce the release of a study commissioned from London Economics on the fine-cut tobacco (FCT) excise taxation in the European Union. This study illustrates the key economic mechanisms of fine-cut tobacco taxation by using the examples of 4 meaningful FCT markets: Belgium, Germany, the Netherlands and the United Kingdom. The study is based on data coming from publicly available sources including national statistical agencies and the European Commission. The 2018 London Economics study reaffirms the key findings of the initial 2015 study, underlining the buffer function of fine-cut tobacco. By providing an affordable legal alternative to price-sensitive consumers when faced with prohibitive tobacco excise increases, fine-cut tobacco mitigates losses in government revenue resulting from rises in illicit trade and non-domestic consumption. Read More
In an interview with Die Welt, EU health commissioner Vytenis Andriukaitis said Europe needs to think seriously about the accessibility of tobacco products and called for full implementation of the Framework Convention on Tobacco Control by all signatories. When asked where money for preventative measures would come from, Andriukaitis said: “Consumption taxes on alcohol and tobacco, which in any case are quite low in many countries, could be increased by a Europe-wide uniform percentage, and the revenue from this increase would then flow into the EU budget.” Read More
Following the decision of some European countries, Belgian Health Minister Maggie De Block recently announced that an agreement had been found to introduce plain packaging for tobacco products. If the effective date of the measure has not yet been specified, the Minister of Health has announced that the ban on branding will apply to cigarettes, rolling tobacco and water pipe tobacco. Ms. De Block justified this measure as she believes it will reduce tobacco consumption as demonstrated in other countries. Read More
A recently published study in the BMC Public Health journal (here), finds several reasons why younger smokers in Ireland use roll-your-own tobacco. Based on 62 participants this qualitative Study finds that affordability is one factor amongst several considerations why the young adults interviewed switched from manufactured cigarettes to smoke roll-your-own tobacco. Read More
The KPMG 2017 Project Sun report on counterfeit and contraband cigarette consumption in Europe shows an overall decrease in the trade of illicit cigarettes, although they are still estimated at 8.7% of total consumption. In total this represents a tax revenue loss of €10bn for EU member states, making illicit cigarettes one of the largest sources of overall consumption. Read More
The European Commission’s DG TAXUD published end of July the updated releases for consumption of cigarettes and fine-cut tobacco, including 2017 figures. Sales have declined for fine-cut tobacco products by around 6%. Read More
The city of Paris has turned six parks into non-smoking areas. This ban on smoking is supposed to last for a trial period of four months before a probable extension to all gardens and parks in the capital. So far, there has only been a smoking ban on 500 playgrounds, but this move is considered to be the next step in the city’s anti-smoking policy. Countries like Finland, Iceland, the UK and some US cities have implemented a similar ban. Read More