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Tobacco firms cut profits to keep prices stable

Published on 10/02/2005

10 February 2005

BRUSSELS – Belgian cigarette producers are to keep prices at 2004 levels to avoid passing the cost of high taxes to the consumer.

Cigarette companies have already cancelled the labels announcing higher prices in an effort to side-step the tax man.

Philip Morris has been leading the pack, making the decision to stall price rises already in January.

Smaller cigarette producers have been waiting in the wings to see what action larger companies will take.

Theoretically, the price of a packet of 20 cigarettes should have risen from EUR 3.90 to EUR 4.10 in 2005.

A packet of 25 cigarettes will still rise by 25 cents to EUR 4.70.

The cigarette companies say they will still pay their tax dues but have chosen to reduce their profit margin rather than pass on the costs to smokers.

[Copyright Expatica 2005]

Subject: Belgian news