Price goes up and cigarette sales should drop 8%
Source: Valor Econômico, 09/04/2009
Under heavy tax and anti-smoking artillery, Souza Cruz, owner of almost 62% of the Brazilian cigarette market, reacts by shooting. In an interview with Valor, Dante Letti, president of the company's Brazilian subsidiary, said that the increase in taxation, which takes effect from May 1, will reduce the formal cigarette market by up to 8%, jeopardizing the government's desired effect on the collection, estimated at R $ 975 million in 2009. Letti also criticized the new warnings that the National Health Surveillance Agency (Anvisa) intends to stamp on cigarette packs from May 27, stating that they project “a nanny state ”.
The increases in the Tax on Industrialized Products (IPI) and PIS / Cofins for cigarettes, which together would represent a 38% increase in the product's tax burden, will, in Letti's opinion, increase the informal segment's share (smuggling and evasion) in the market - would rise from 28% to almost 40%, as in the 1990s. Except for the lack of studies to measure the effects of the increase in Brazilian income in recent years on their loyalty to the cigarette brands they consume, the potential to reduce legal consumption, with a 20% increase in the price to be paid, is “between 6% and 8%”, evaluates the executive.
Letti was vehement about Anvisa's new warnings. “What we are against (in regulatory measures) is when there is radicalism, there is a presumption that people are unable to decide by their own will and initiative and that, therefore, we have to create a nanny state that will say at all times what they can and what they cannot do ”, said the executive. Letti stressed that, excluding what he considers to be excess, "there is a lot of good that is done in anti-smoking, in the sense of making people aware of the risks inherent in smoking".
The president of Souza Cruz, a British American Tobacco (BAT) subsidiary, also said that, positive effects aside, there is “a wave of radicalism in Brazil and in the world”, materialized in an “excessive State intervention” in the lives of citizens . For him, once he is aware, it is up to the citizen to decide what he wants to do. Letti also stated that, by acting with the objective of "making a product ridiculous" to the consumer, Anvisa would be "exacerbating the right of a regulatory agency to inform about products".
Souza Cruz and the entire tobacco sector have been trying to overturn at least six of Anvisa's ten new warnings in court. According to José Agenor Álvares, director of Anvisa, three judicial decisions against the measures, announced in August 2008, have already been overturned, leaving one, he said, filed by the Public Ministry of Santa Catarina.
For Álvares, the president of Souza Cruz is “completely wrong”. According to him, the regulatory agency must not only inform, but also regulate what the legislation determines. According to the director of Anvisa, domestic legislation and international agreements signed by Brazil in the area of health corroborate the placement of "aversive figures" as ways to get people "to think more deeply about harmful agents". "We know that cigarette smoking is highly harmful to health," said Álvares. And, about the images, he asked and replied: “Are they aggressive? Are. You may not agree, but they are meant to be aggressive ”.
About the project approved this week by the Legislative Assembly of São Paulo, banning smoking in all closed collective spaces, Souza Cruz says that it “does not meet the demands of all parties involved in a balanced way”.