The French government is targeting smokers to help pay off its mountain of debt. A new rise in tobacco prices from October should bring the over-indebted government a billion euros in additional revenue.
In a country famous for its laissez-faire attitude to smoking bans, the French government is now hitting smokers where it hurts: their pocketbooks.
From October 1, French smokers began to pay 6.5% to 10% more for tobacco. And this, following the entry into force of an unpopular price increase. No pack of cigarettes in France will cost less than €6.10, with premium brands being €7.
It is not clear if this price increase will ultimately push French smokers to quit. Because the total smoking ban of 2008 in France has failed to reduce the number of smokers. The number of smokers aged 18 to 75 increased by 2 points between 2005 and 2012, eventually reaching nearly 30% of the population.
But public health is not the only concern of the government of President François Hollande. The price hike has also been touted as a way to add a much-needed billion euros to state coffers next year.
Tobacco is only one of the few consumer goods that will experience a significant price increase. As Paris tries to fight its debt of 37 billion euros: beer will cost consumers an average of 15% more in 2013. Which will bring in an additional 500 million euros.
In 2011, taxes on cigarettes resulted in 13.8 billion euros in revenue.
Tobacco and rising prices: no one is happy
However, neither tobacco sellers nor anti-tobacco activists are happy with the new measure. A measure that will see a pack of cigarettes cost around 40 cents more. Tobacconist owners fear that the rise in prices will encourage the tendency to buy cigarettes purchased abroad.
According to a July 2012 study by KPMG, 21.1% of cigarettes consumed in France come from abroad. The study, commissioned by tobacco giant Philip Morris, says a quarter of these non-French cigarettes were bought legally from duty-free shops or neighboring European states. But that three-quarters were counterfeit or contraband products that escaped any taxation.
At an average price of €7, high-end cigarette brands will be more expensive in France than in neighboring countries Spain (€4.25), Germany (€5.16), Belgium (€5.05), Italy (€4.90) and Luxembourg (€4.40).
However, a pack of premium cigarettes in the UK costs around €9.35 (£7.47). That is nearly €2.50 more than the new price in France.
Meanwhile, French anti-tobacco groups said 40 cents per pack was a modest price hike. Which would not encourage smokers to crush it in large numbers.
Yves Martinet, president of the Alliance Against Tobacco, said a sharp rise was the only way to break consumer habits. “A slow and gradual increase has very little effect on consumption”. Martinet told the AFP news agency.
According to data from the French National Institute for Prevention and Health Education (INPES), Marinet is right. The last significant drop in the number of daily smokers in France – 27% less from 2002 to 2004 – was caused by a sharp rise in prices in 2003.