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Posted on 09/24/2003 11:23:56 AM PDT by Pikamax

France Hikes Taxes on Smokers, Manufacturers Gripe Wed September 24, 2003 11:13 AM ET

By Catherine Bremer PARIS (Reuters) - France is waging war on the quintessentially French habit of smoking, slapping on higher taxes that will inflate the price of a packet of cigarettes by 40 percent over the coming year.

Tobacco makers fear price hikes will simply prompt more smokers to buy on the black market or cross the border to stock up on cheaper cigarettes from abroad, foiling the government's plan to rake in more tax revenues from smokers.

Coming on top of a price hike in January this year, the latest increases are infuriating some of the 9 million smokers in France, notorious for its smoky cafes despite a crackdown in restaurants, offices and airports.

They are being imposed just as large slogans like "Smoking Kills," familiar in north America and Britain, are appearing on French cigarette packets under a new European Union ruling.

"Higher prices won't make me stop smoking -- I'll just save money elsewhere," said Clotilde Neveu, 29, smoking a cigarette from among 40 packets she brought back from a trip to Greece.

"The slogans are a more effective way to make people give up than price rises. We're being penalized for the health deficit."

Health Minister Jean-Francois Mattei said on Tuesday that reducing smoking-related cancers was a national priority, as he detailed tax hikes set for October and beyond. "Our aim is to save lives -- 60,000 deaths each year are linked to tobacco, and it will soon be more than 100,000," he said.

The Health Ministry, braced for a 13.6 billion euro deficit in 2004, is also looking forward to raking in some 800 million euros as tax increases raise the price of the average packet of cigarettes to 5.50 euros by mid-2004 from 3.90 euros now.

However, tobacco giant British American Tobacco published a study on Wednesday showing that one in 10 French smokers buys cigarettes from abroad at least once a month.

"This is a concern for BAT France because prices are not the same in different countries. This means a loss of earnings for us and also for the government," said spokesman Olivier Blain.

The head of Japan Tobacco International in France also told Europe 1 radio tax hikes could also encourage smokers to buy cigarettes on the black market.

Helped by the euro, the French are stockpiling cigarettes in Spain, Italy, Belgium, Germany and Luxembourg for as little as 2.90 euros per packet.

"In Greece they are 2.70 euros a packet," Neveu said. "Ever since they went over three euros here I try to get them abroad."

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