PETER IMRE The increase of the minimum excise for cigarettes only affects one company, but it is beneficial for the state budget

Cosmina CapalĂu

The increase of the minimum excise for cigarettes, that "Philip Morris" is backing, would only affect one player on the market, whereas the State budget would benefit from this decision, says Peter Imre, Corporate Affairs Director for "Philip Morris" Romania and Bulgaria.

According to Mr. Imre, both the Ministry of Finance as well as tax collectors should take this into consideration. "If it doesn"t happen, (editor"s note. the raise of the minimum excise from 91% to 100%), this is going to be a favor that only one company will benefit from".

Mr. Imre also said that "the minimum excise is not required, it is optional, which means there are no restrictions on its increase. If seven out of the 27 countries which are part of the European Union don"t have such a tax, it means that the 20 member states that do have it consider it an efficient method for bringing additional revenue to the state budget and an effective measure to prevent price discrepancies. Of course we agree that it"s a free market and price is part of the competition. But we are talking about an industry that is severely regulated. The World Health Organization itself agrees that pricing is the most effective method for raising more money for the state budget and lowering the number of smokers. Therefore, the only thing I would ever comment on is that indeed, there is only one tobacco company that would benefit or be at a disadvantage if the level of the excise were to be changed, whereas the remaining competitors that cover 70-80% of Romania"s cigarette market, would not be affected in an way", he said.

• Imre: "If increasing the tobacco excises will help increase State Budget revenues, then the Ministry of Finance should go ahead".

Corporate Affairs manager "Philip Morris" for Romania and Bulgaria said that "the Ministry of Finance is interested in collecting money, and if anyone can prove that once the minimum excise is raised to 100% will lower the earnings of the State Budget, then hats off to them. If the State Budget can prove through simple calculations that raising the excise will increase state budget revenues, then I would like to ask the Ministry of Finance why not go ahead and do it. Is there a reason they do not want more money for the state budget? And also, why do they want to be the arbiter of the cigarette market?", Mr. Imre said.

Peter Imre considers that given the current circumstances, "the question is simple: will the State budget earn more or less by increasing the minimum tobacco excise to 100%? If the numbers show that the answer is yes, then the Ministry of Finance, should increase the excise for the public good, especially in times of crisis such as these.

• The increase of the minimum tobacco excise will not make cheap cigarettes go away

According to Mr. Imre, any company can sell cheap cigarettes, "it"s not the cheap cigarettes that will go away, it"s the profit of the producer or at least part of it. And maybe then, that will make companies relying on low prices have to compete on the "Value" and "Premium" segments. A company that sells cheap cigarettes does not do that for the benefit of consumers, but rather because it has found a market niche, it is its sales strategy. It"s just that this strategy goes against the State"s goal to increase its budget revenues, as well as against the goals of the Ministry of Health to lower the number of smokers. Therefore it"s untruthful to say that the minimum excise will cause cheap cigarettes to go away", he feels.

According to the spokesperson for "Philip Morris", the tobacco industry is competitive, and the "battle" must shift to the marketing front, of winning over customers through quality, and not by administrative measures taken by the Ministry of Finance to discriminate in favor of a specific company.