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Tobacco Directive

Late transposition of the Tobacco Directive generates further losses for retailers, manufacturers and the State budget

As of May 20, 2017, tobacco products available on the EU markets must be compliant with the new Tobacco Directive, transposed in Romania by the law 201/2016.

“The Directive is a hugely complex, burdensome and restrictive piece of legislation. This is also an attack on legitimate businesses and adult consumers’ freedom of choice. The Directive will not achieve its public health goals, but shall have huge consequences for local economies, jeopardizing thousands of legitimate businesses and employees, from farmers to packaging manufacturers, and tobacco producers to retailers”, Ben Townsend, JTI EU Affairs Vice-President stated.

The Tobacco Directive provided as deadline for the transposition in the national legislations the date of May 20, 2016, which was exceeded in Romania by far, whereas the new law has become effective only in December 2016, cigarette manufacturers point out. Consequently, the period reserved for the consumption of the pack stocks manufactured according to the former regulations was reduced to just six months.

“We are talking about millions of packs that are becoming incompliant by the operation of a delayed law and not because the products are improper for consumption. We have manufactured and placed on the market products for which we have paid excises and taxes at the time of their release from the bonded warehouse. The Ministry of Finance has collected the due excises and VAT, the Health Ministry has collected the sin tax, the Ministry of Youth and Sports has collected the sports contribution, the National Printing House has collected the money for the stamps. About 70,000 retailers have bought products they can no longer sell, being subject to potential fines amounting up to RON 100,000,” Gilda Lazar, Corporate Affairs & Communications director, JTI Romania, Moldova and Bulgaria, said.

She explained that, theoretically, if the products are withdrawn and destroyed, the paid excises should be recovered from the budget. However, only the excises, and only if and when the repayment thereof is approved. The production costs, the sin tax, the sports contribution, the price of the stamps, the VAT, the costs involved by the stock management and rotation, withdrawal, storage, transport and destruction, the salaries of the people involved in this useless mega-project cannot be recovered, still.

“Thus, the manufacturers, the retailers and the State are losing and paying for this, and not the experts and activists that have delayed the transposition”, Lazar also stated.

The Law 201/2016 does not provide a procedure or obligation to withdraw the incompliant products for the manufacturers. Once removed, the packs must be destroyed at the expense of the manufacturers (according to the procedure for incompliant and smuggled products provided in the Tax Code), but not prior to being inspected by the tax authorities and not before the establishment of the destruction commission, in the presence of the law enforcement authorities.

The preliminary study performed by the European Commission shows that the new regulations shall result in the decrease by 2 percent of the tobacco products consumption within five years.

About Anca Bernovici