VAT Decrease Debacle


Philip Morris and their appointed distributors Primeline were left with egg on their face this week when they had to make repeated and often contradictory contact with their customers in respect of their “Lanigan’s Ball” style of conducting business in Ireland.

Claiming to have been caught unawares by the Governments lack of restrictions on price decreases for tobacco products on foot of the 23%/21% change to the Standard Rate, the owners of the Marlboro and L&M brands took a quick look at what their competitors had done with RRP and initiated, by way of informing Revenue, a change to their brands selling prices.

We can understand why PMI may have considered that our Government, led by Michael Martin (who will always be associated with the implementation of the “smoking ban”) would have outlawed any decrease. It is a fact that in other jurisdictions when similar short term stimulus packages were introduced through reductions in Sales Taxes or VAT, those countries specifically excluded tobacco products from any reduction, on Public Health policy grounds.

Nevertheless, they made a decision, communicated to all last week, that they were NOT altering the RRP’s or wholesale prices of their brands, a move that would have provided an additional €1.70 per carton to retailers. They should have stuck by that decision. We went so far as to single them out for honourable mention in last week’s newsletter in an article written by CSNA National President Peter Gaughan, a mention we now wish to withdraw and substitute it with the term best suited to their about turn, that is, “Clueless”.

It seems hard to believe that this company, with representatives in the country, are not aware of the laws regarding the sale of cigarettes at any price other than that notified to Revenue.

When they were distributed by John Player and prior to that, TDL, they most likely were provided with assistance to prevent the mess they got themselves into. However, they elected to go with a company that did not have a background in the extremely complex area of managing and distributing one of the most highly regulated products in the country.

The 4 tobacco companies have made it very clear that they are incapable of being the source of setting or fixing a retail price that is ring fenced by the State as being the ONLY price that cigarettes can be sold at. On too many occasions, in too many ways, these companies have stymied and fettered the ability of tobacco retailers to earn a fair and reasonable return for their part in the sale of a highly regulated product.