Les Echos reported today that France has inserted into its draft 2018 social security financing bill a plan to systematically raise tobacco prices over the next three years. In addition to cigarettes and rolling tobacco, the plan will apply to snuff, chewing tobacco, cigars and cigarillos.
According to figures cited in the French daily, the most expensive brand of rolling tobacco would increase by 1,24 euros to a cost of 6,36 euros for a 16-gram pouch in March next year. While this increase is less than that for cigarettes, the draft measure calls for relatively high tax hikes on tobacco products other than cigarettes to avoid creating a substitution effect.
ESTA maintains that fine-cut tobacco plays a vital role in reducing the counterfeit risk to consumers and protecting government tax revenues as rising prices of cigarettes force consumers to seek out cheaper alternatives. Fine-cut tobacco has so far acted as an important buffer between legal and illegal products by decreasing the demand for illegal tobacco, due largely to its lower price.
“Making rolling tobacco increasingly expensive relative to cigarettes will simply defeat the purpose of buying the product for price-sensitive consumers and drive them toward illegal products,” ESTA Secretary General Peter van der Mark stated.