July 14, 2008

UK tobacco case

LONDON - Six companies will pay a maximum of 173.3 million pounds ($342.5 million) after admitting unlawful practices relating to the retail price of cigarettes in the UK, under a deal with Britain’s Office of Fair Trading (OFT).

Japan Tobacco said its Gallaher unit had agreed to pay 93 million pounds for taking part in anti-competitive practices during 2000 to 2003, before the Tokyo-based cigarette group bought the British tobacco company in 2007.

The other five groups, all retailers, were Wal-Mart-owned Asda, First Quench, One Stop Stores (formerly called T&S Stores), Somerfield and TM Retail, a statement by the British regulator said on Friday.

A number of the six parties had previously applied to the OFT for leniency and the total penalties the groups agreed to pay, if all leniency and early resolution discounts are given, is 132.2 million pounds, rather that the pre-discount penalties total of 173.3 million pounds, the OFT said.

The OFT did not say when a final decision on the level of fines would be taken.

The regulator added that supermarket group Sainsbury Plc was the first to apply to the OFT for leniency and will receive complete immunity if it continues to co-operate.

Investigations will continue against Imperial Tobacco Plc, Shell and retailers Morrisons, Morrisons-owned Safeway, Tesco and the Co-operative Group, the OFT said.

Imperial Tobacco said in a statement it had not admitted to any infringement of competition law and had not acted in any way contrary to the interests of consumers. It said it would continue to co-operate with the OFT. (Editing by Mike Elliott and David Holmes)

July 4, 2008

Japan Tobacco Tax Could Triple Prices

TOKYO — Japan, long known for its smoker-friendly policies, is debating a substantial tax increase that could bring Tokyo in line with the U.S. and Europe.

The ruling Liberal Democratic Party’s annual tax commission is expected to review a proposal by key lawmakers that could more than triple the retail price of a pack of cigarettes to about $10.

The backers of the higher tax are looking at the additional revenue as a way to cut Japan’s ballooning budget deficit without taking the deeply unpopular move of raising its consumption tax.

Japan Tobacco Inc., which has a virtual monopoly on cigarettes here and is 50% owned by the government, argues that more-expensive cigarettes would depress sales and lead to lower tax revenue. The company, the world’s third-largest tobacco maker by volume after Altria Group Inc. and British American Tobacco PLC, on Tuesday sent executives to lobby the LDP against an increase.

"The government can’t hope for increased tax revenue, because such a big raise in the tax would mean consumption plummets," JT Deputy President Ryoichi Yamada said afterwards. "It’s unfair that smokers should have to bear the burden" of poor government finances.

Japan needs to boost government revenue to pay for pensions for its rapidly aging population. Government debt was 849 trillion yen ($8 trillion) at the end of March, equal to more than 160% of the country’s gross domestic product. One measure put forward to meet the shortfall is raising the 5% consumption tax. But consumers are sure to oppose that, and Prime Minister Yasuo Fukuda, already suffering from low approval ratings, has been reluctant to push the idea.

Many in Japan’s ruling party see higher tobacco tax as a promising alternative. In mid-June, about 45 lawmakers formed a bipartisan league to argue the case for higher taxes. One of its main advocates is LDP heavyweight Hidenao Nakagawa, former chief cabinet secretary and an opponent of raising the consumption tax.

The price of a cigarette pack in Japan is among the lowest in the industrialized world. On average, a pack costs about 300 yen, of which roughly 60% is tax. That is less than half of what a pack costs in New York and less than a third of what it costs in the United Kingdom.

These lawmakers argue that raising the cigarette tax would boost Japan’s tax revenue from the product, which was around 2.2 trillion yen for the year ended March 2008. If cigarette consumption remains unchanged, charging 1,000 yen a pack would increase cigarette-tax revenue by 8.5 trillion yen a year, according to Barclays Capital. But surveys show that as many as three-quarters of smokers say they would try to quit if cigarettes cost 1,000 yen a pack, though it’s unclear how many would succeed.

Health proponents, including the country’s physicians and Health Ministry, say an increase in cigarette taxes would cut down on health-care costs. Japan has one of the highest smoking rates in the industrialized world, at around 40% for men and 10% for women. Lung cancer is a leading killer among men.

June 20, 2008

Estonian retailers are no longer allowed to sell cigarettes with old tax stamps

As after the end of September 2008 the Estonian retailers will no longer be able to sell cigarettes with old tax stamps on which lower excise taxes have been paid, writes Postimees Online/LETA.

Tobacco retailers estimate that the only way to earn money on stocks that will remain after that deadline will be to destroy them as then the State will return the excise tax paid on them.

Different State authorities have come up with different estimations on how large are the stocks held in cigarettes in Estonia at the moment. The Ministry of Finance estimates that the stocks should be enough until the end of summer while the director of Institute of Economic Research Marje Josing stated that nine months’ reserves have been imported to Estonia.

April 25, 2008

Treasurer supports single tax rate for smoke shop cigarettes

State Treasurer Scott Meacham says he would support the idea of having one single compact rate for all American Indian tribes that sell cigarettesin Oklahoma.
Meacham says he is not bailing out on a multiple-stamp system, but it would be easier to enforce a single rate. He believes that would help Oklahoma move forward with cutting down on smoking while raising more money to benefit better health in the state.
Attorneys from the Oklahoma Tax Commission and tribal smoke shops are currently working on an agreement that would limit the sales of low-tax cigarettes in the state.
The agreement would lift a restraining order and cut down on the number of cigarettes that can be sold with 6-cent tax stamps intended for use near the state’s borders.
Smoke shops that aren’t near a border must sell 86-cent stamps.