Strasbourg, 09/06/2005 (Agence Europe) - The Council and Commission are expected to make a commitment to using the money paid by Philip Morris International (PMI) in the cigarette smuggling affair in Europe and for fighting fraud, according to Belgian Green Bart Staes, who was questioning the European Commission on Wednesday at the plenary on use of money promised in the agreement with Philip Morris, the Commission and 10 Member States in July 2004. According to this agreement, the firm is committed to paying USD 1.25 bn over twelve years to the Commission and 10 Member States: Belgium; Netherlands; France; Germany; Italy; Spain; Portugal; Greece and Spain. At this stage, the discussions are focusing on the sharing out and payments of the benefits. The European Commission proposed a distribution between the 10 Member States supporting the trial, in correlation with the level of Philip Morris cigarette sales and quantities seized on their territory. It intends to reserve 9.7% of the total amount for the Community budget (for all Member States). This level is judged too high by beneficiary countries.
On behalf of the Luxembourg presidency, Nicolas Schmit, European affairs minister, underlined the full agreement from the Council on the need to fight all fraud, notably contraband and cigarette counterfeiting. However, he did underline that as an institution “the Council is not an involved party in this dossier”. He pointed out that the agreement simply underlines “the opportunity for Member States to carry out actions to fight fraud” but that this was the responsibly of Member States alone. Fisheries Commissioner, Joe Borg said that the agreement would allow additional funding for the anti-fraud struggle but that it did not include the specific obligation of how they were used. He explained that “funds enter into the Community budget as non-attributed funds…a consensus has to be found soon” on how they are shared out between the Commission and Member States and between the latter themselves. Szabolcs Fazakas (PES, Hungary) and Valdis Dmorovskis (EPP-ED, Latvia) called on new Member States to support the countries already supporting this agreement and extend it to other cigarettes and even alcoholic drinks. Herbert Bösch (PES, Austria) warned against tax hikes on tobacco, which sometimes constitute a “red carpet unfolded under the feet of criminality”. He appealed to the Council to discuss payments to the EU25 and not simply leave it to each of the Member States to decide.
Contraband cigarettes lead to losses of at least EUR 200 million a year
Parliament adopted the report by Herbert Bösch on Tuesday on protecting the Community's interest and the fight against fraud. It underlined that estimates from Member States put losses of revenue due to contraband cigarettes at around EUR 200 million in 2003 and that “everything suggested that total losses were much higher than this amount”. MEPs welcomed the agreement concluded between the Commission and the ten Member States and Philip Morris International for fighting contraband cigarettes (see above). The EP is pleased that Austria, Ireland and Malta are supporting the agreement and are calling on all other Member States to immediately do the same. It is also calling on the Commission to conclude similar agreements with other cigarette manufacturers.
The EP warns against any increase in cigarette taxes, which leads consumers to change their behaviour (and choose lower prices products; for example), noting that heavy tobacco taxes constituted an additional incentive to commit criminal acts (notably contraband and counterfeit cigarettes). It also points out the increase in small scale trafficking (counterfeit cigarette sales) and that the circuits used by cigarette smugglers could also be used by drugs smugglers and other fraudsters. MEPs regret that the services of Member States are not sending OLAF (Anti-Fraud Office) information they have on transit points (such as South Asia) for counterfeiting and smuggling cigarettes.