A report can reveal a great deal about the paradoxes of public action. The one the Court of Auditors dedicated to state support for tobacco retailers, published in its annual public report in February 2017 under the title The Fight Against Smoking: A Policy to Be Strengthened, provides a striking example. The financial magistrates show that a mechanism intended to accompany the decline in cigarette consumption ended up mechanically benefiting tobacconists who sell the most. A paradox, when the declared objective remains public health.
The support for tobacconists, across all forms of aid, amounted to 2.6 billion euros between 2004 and 2011, i.e., more than 300 million euros per year. A colossal sum, disbursed within the framework of “contracts for the future” and then successive “protocols of agreement” signed between the State and the Confederation of tobacconists. Since 2004 the State has provided special support to tobacconists to cushion the effects that a drop in tobacco consumption could have on the revenues of these merchants. On paper, the logic holds: taxes are raised to discourage smoking, therefore those who lose turnover are compensated. But the mechanism adopted by the Customs administration produced the exact opposite of what it claimed to correct.
Key takeaways
- A public health policy has turned into a “cash machine” for the tobacco distribution network
- The compensatory rebate indexed to sales created massive windfall effects among the largest sellers
- No data has ever proven that these 4 billion euros slowed cigarette consumption
A rebate calculated on sales, therefore on tobacco sold
The core of the issue lies in the net rebate. This mechanism remunerates the tobacconist as a percentage of their tobacco turnover: the more packs they sell, the more they earn. In addition, there are aids for transforming sales outlets and severance indemnities, meant to facilitate the reconversion of the most fragile shops. Three schemes, one and the same calculation logic: everything is indexed to the volume sold.
The Court does not mince words on this point. It regrets that the situation mainly benefits tobacconists, “to the detriment of State revenues,” and urges public authorities to reconsider the provisions of the agreements as a matter of urgency. A system meant to accompany the decline in consumption ends up rewarding those who sell the most, regardless of their actual need for support. Thus, more than a third of the recipients of the compensatory rebate in 2015 had a turnover exceeding 300,000 euros, and 43 even surpassed one million euros in turnover. Shops that objectively had no real need to be “saved.”
No evaluation, a generalized windfall effect
What strikes most about the report is the complete lack of impact measurement. The Court condemns a policy “driven blindly, with mechanisms insufficiently controlled and targeted by the administration,” despite detected fraud. No one, at any moment, demonstrated that the hundreds of millions of euros injected each year actually slowed cigarette sales or accelerated the reconversion of points of sale. The magistrates moreover refer to “untargeted aids” and “massive windfall effects,” demanding a rapid and complete overhaul of these aids.
The governance of the scheme itself raises questions. The support mechanisms are developed and implemented under the aegis of the sole Customs Directorate of the Ministry of Economy and Finance, in close liaison with the Confederation of tobacconists, but in the absence of the Ministry of Health. Concretely, the person negotiating the financial compensations is never the one steering the tobacco-reduction policy. Two logics that should converge have instead evolved in sealed compartments, each on its own side of the Ministry of Finance.
The result is almost comical in its absurdity: the income-support schemes for tobacconists remain numerous, poorly targeted, and insufficiently controlled, while the retailers’ revenues continue to rise, helped notably by the increase in the selling price of tobacco that feeds into turnover and by the rise in the net rebate rate. The supposed public health tax measure has mechanically raised tobacconists’ pay, enabling them to keep selling tobacco through the proportional rebate. The public health tool has thus become a cash machine for the distribution network.
A public health argument never verified
To justify maintaining the tobacconist network rather than its elimination or overhaul, the administration regularly cites its role in enforcing the ban on sales to minors. An argument the Court considers largely unverifiable. The arguments advanced to justify keeping this organization, notably the implementation of public health policy and the prohibition on sales to minors, are poorly supported: no data could be provided on the number of controls and any infractions by tobacconists in relation to their public health obligations.
One may say that the sole health justification for the scheme rested on a claim never verified by the public authorities themselves. A paradox for a policy that presents itself as a pillar of the anti-tobacco fight. Since then, protocols have continued to succeed each other, the 2023–2027 protocol renewing the net rebate, transformation aids and severance indemnities, with the same levers as those criticized nearly ten years ago.
The total amount of aid paid since 2004 now exceeds 4 billion euros according to several estimates by anti-tobacco advocacy groups, far from the 300 million annually initially pointed out by the Court. What has not changed, however, is the very principle of the calculation: as long as the compensation remains indexed to the volume of packs sold, it will mechanically reward those who keep smoking France.
Sources: douane.gouv.fr | contre-feu.org | questions.assemblee-nationale.fr
