LCI reported this week that a series of proposed price hikes in France for cigarettes will also apply to rolling, or fine-cut, tobacco. The French news network said it confirmed with the office of French Health Minister Agnès Buzyn that six scheduled increases will be “symmetric” for fine-cut tobacco – ultimately adding 3,25 euro per package by late 2020.
The government plan would come into effect by year end and increase prices first by 35 cents, then by 1 euro in March 2018. In both April and November 2019, prices would rise by 50 cents, and they would shift upward again by 50 cents in April 2020 and 40 cents in November 2020.
As a semi-finished product, fine-cut tobacco is a different consumer good compared to finished-product cigarettes, with smokers having to make separate purchases of rolling paper, or tubes, before investing time to manually prepare fine-cut smoking articles for use. This gives fine-cut tobacco a lower tax-bearing capacity than cigarettes, while fine-cut tobacco consumers are also largely more price sensitive than consumers of cigarettes.
“Undermining the excise tax differential between fine-cut tobacco and factory-made cigarettes will push rolling tobacco consumers toward cheaper alternatives, which tend to be counterfeit,” ESTA Secretary General Peter van der Mark said. “That makes the French plan to uniformly tax tobacco products counterproductive to the fight against the illegal tobacco trade,” he added.