Social VAT Will it cause a large increase in tobacco?
Posted by adminBercy is considering a mechanism for not achieving a 10% rise in tobacco prices. Finally, it should increase by 2% on 1 October. Which must be added the 6% increase already planned. Next autumn, tobacco is going to experience a sharp rise again.
The government will review the tax on tobacco to reduce the effect "multiplier" of the social VAT on tobacco prices and avoid too large an increase of the cigarette package, officials said Saturday at Bercy.
The Ministry of Economy "is considering reducing the multiplier effect of the VAT hike on tobacco through a lowering of excise (tax collected by the State, Ed) on tobacco", it was indicated to the Department, confirming a report published on the website of Les Echos.
Besides the increase of 1.6 point VAT on 1 October, a 6% increase in tobacco prices in 2012. Due to the complex mechanism of pricing of cigarettes, the combination of these two boxes (one on taxation, the other on price, Ed) mechanically lead to an increase greater than 10% of the package.
At the announcement of the introduction of VAT social, tobacconists and manufacturers have alerted the authorities about the effects of this increase that threatens their marges.Bercy will reduce excises, to 63.28% as against 64, 25%, erasing "to nearly 90%" the VAT increase, according to Les Echos.
+ 2% from 1 October (6%)
"There will end up with a slight overall increase in taxes on cigarettes (0.13 points), corresponding more or less to the impact of the VAT hike in other sectors", according to the newspaper.
These figures have not been confirmed by Bercy which emphasizes that "the tobacco industry will contribute as much as other sectors". Les Echos report that "the margins of manufacturers fall moderately", without elaborating.
Ultimately, the VAT hike is expected to increase prices by 1.5% to 2% effective October 1, understands the quotidien.A this increase must be added the 6% pay increase for the fall at a date not yet known.