Minister calls for prices probe

TOBACCO wholesalers and retailers could be ripping off customers and the taxpayer to the tune of hundreds of thousands of pounds, according to the Treasury Minister.

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TOBACCO wholesalers and retailers could be ripping off customers and the taxpayer to the tune of hundreds of thousands of pounds, according to the Treasury Minister.

Senator Philip Ozouf has raised concerns that they are exploiting smokers by stockpiling cigarettes bought at 2012 duty prices and selling them with the additional 2013 duty added on.

He has now called for the Island’s competition watchdog to investigate the matter to make sure the sellers are not exploiting a dominant market position and profiteering.

Senator Ozouf explained that duty was paid when tobacco was imported and not when products were sold by retailers.

Comments for: "Minister calls for prices probe"

Tony Allman

So whats new.Local retailers wonder why so many of us use the internet to shop,or ask friends to shop duty free on carriers to the island.

Islander

Hopefully the higher the cost is then less of this dangerous drug will be used.

What does seem appalling is that our government, as well as many others, is fully aware of the dangers and still allows it to be sold and used.

The Thinker

Whilst on the one hand I agree with your sentiment that tabacco is a dangerous drug I have to take issue with your view that it should be made illegal.

There are two major flaws to this proposal. Firstly the only reason that I can see to make it illegal is on health grounds. That then opens the door to banning any other 'unhealthy' products. At present obesity is a significant health problem. I'm sure an argument could be made for banning foods with a high fat content such as chips. Then of course that other recreational drug of choice - alcohol is also extremely bad for you in excess (whatever excess is to an individual). I suggest the 'bad things to put in your body' list would be very long and if adopted we would all end up in a very safe but extremely boring part of the world!

Secondly if you banned what are currently legitimate cigarettes, a black market would instantly commence involving the sale of goodness knows what. Smokers would find an alternative and that substance would probably be far worse for them.

At present, as there has been for the last thirty plus years, there is an ongoing argument about legitimising of some or all of the current illegal drugs. Although there are many stands both for and against one of the factors in this debate is that criminal gangs currently influence the market and much of the 'produce' is highly contaminated because it falls outside of any regulation. If illegal drugs such as cannabis were made legal then at least the user would be better protected from street sellers.

In the mean time if you look at the figures you will find that year on year fewer young people take up the habit and this surely is the way forward through Education.

MsMetaledge

and what do you propose that the government tax in it's place to recoup the lost millions if everyone stopped smoking???

Zippy

Savings would be made in Health care costs

James Wiley

There are two reasons that you are wrong Islander.

Firstly the government will only act to protect its revenues, it keeps us healthy solely so we can keep paying tax. I mean one department takes so much tax from some people, that they have to go and beg for some of their own money back from a different department just so they can pay the bills.

So smoking is good because we can still work out our working lives and pay more tax but will not be such a burden on the States in the end. Yes I know treating cancer and heart disease costs money, but until they find a cure for death, health care costs are inevitable one way or another.

Thankfully smokers help fund the health services

Secondly God gave us free will, it is not for government to take it from us (although they give it a damn good try). I am an adult, not a child, I make my own choices. Dangerous = fun, safe = boring. A fact of human life.

The higher cost will lead to a market reaction - that being increased smuggling. There will also be no increase in the amount of revenue raised through this increase in impots.

Still Ozouf has promised not to raise GST until the end of 2014 which of course means that come 1st January 2015 GST will be set at 10% which means that more of us will be travelling off island more often to buy food etc.

Kermit

Smokers have a shorter life expectancy, meaning no/less pensions to pay out ...

God gave us free will, but religions and governments kind of made the decisions for us...

Depending on how relax or stock up your government is, with cannabis you could be classified as a medical patient in one country or a criminal in another. You could also get death penalty in some others. How does that work? who s wrong? who s right?

R. Williams

Does the senator not understand business?

You buy as cheaply as possible and sell as expensively as you can.

An item is worth only as much as someone will buy it for. Sometimes you make a good profit. Sometimes you make a big loss. Usually it is somewhere in between.

I wish these retail amateurs such as the Senator would not make these meaningless statements designed to agitate the naive.

If the items too expensive no-one will buy it. If you sell it too cheaply, you will go out of business as you will have no resources to re-invest.

Katie

Ripping off customers does not seem to be against the law in this case, but the thing that used to wind me up was when retail outlets used to put tobacco and booze prices up the day after the budget ! And if we are talking about rip off's here, how come you can buy a carton of 200 ciggies duty free for £25, when in a retail outlet the same would cost you over £60 ? Someone is making a large profit here and i doubt its the retailer !

bystander

What this article doesnt cover are the retailers that put there prices up even before the introducion of the new duty increase. I went into the super market on queens road (you all know the one, before B&Q, not mentioning any names) and bought a packet of cigarettes for my girlfriend on NYE. She had given me the amount she normally paid but I was short, they had already put up their prices and they had gone up by 10% of the whole price (60p) and not the 10% duty increase (38p).

I know what some people might say and that I should have just gone somewhere else but that would of delayed me even further, some of these prime location / convenience shops really do have customers over a barrel at times.

Old Crappo

And I don't suppose that it has ever occured to Phil "The Spin" Ozouf that he is exploiting smokers and drinkers when as Treasury Minister at each budget he slaps more duty on fags and booze.

And what about the duty on fuel, the old car road tax was abolished years ago to be replaced by a duty on fuel sales at the pumps and that very same duty now has GST added on top of it!

"People in glass houses......Mr. O" !

Also I wouldn't hold your breath for the results of this investigation its not the first that the boy Ozouf has called to be undertaken, I seem to recall that there have been others which all seem to end up being brushed under the carpet.

This is just another public relations exercise by the Boy Ozouf, personally I

can't wait for his current elected term to come to an end, with his non stop waffle and spin and the fact that when anything ever goes wrong its never his fault its always someone else who carries the can, its got to a stage now that every time I see his picture I now see a face that I would love to slap!

Cindy Heys

Well said Old Crappo - Nail right on the head with your comments :-)

sideline

its the government that are ripping us off 'the reseller is trying to make a profit to pay rent and pay wages .

the thin wallet

pot and kettle comes to mind.

James

Difficult to see what the Treasury Minister is possibly proposing. Should the wholesalers and retailers have run their stocks down to zero at midnight on New Year's Eve? If not, how much stock would the Minister like to legislate they are allowed to have? What is unreasonable?

If he is getting at price control - which I find deplorable - but if he is, how would he police it? If a stockist had indeed run down to zero, would he be exempt from the price control? Or, or....nope, can't fathom what would come out of this "investigation".

The role of Government here is to ensure that if super profits are being earned, it is easy for new competition to enter the market to bring prices down (by increasing supply). Anything else is completely unworkable and, given that the Treasury Minister should know this, one can only conclude that he is after a cheap headline. Which he has got.

By the way, is this the same Treasury Minister who voted to spend our money on a small patch of wilderness at Plemont?

A

PO - This is a perfectly legitimate tax dodge; you of al people should be fanmiliar with these. - GET OVER IT!

BamBam

Whats wrong with that? Its called initiative and speculation... Good luck to them.

How about the Competition Watchdog investigating Ozouf for unfair practices taxing us out of existence on everything they can in the 1st place - including air and water....

the future

Does the same thing happen with petrol prices?

The price at the pump seems to go up as the wholesale price does, despite the fact the petrol held locally was purchased at a lower price.

Jersey Rat

Cigarettes went up in sum shops between christmas and new year not the 1st of january its not on just tobacco its done on everything we buy thing about it again Islander no2 in the UK taxes from tobacco & drink pay for all NHS running costs and more

mallouin

The price increase is a 'duty' increase and is only on goods released from bond after the 1st of January,any increase in the shops should be on new stock from bond not stock already held.Some apply it fairly many don't and the increase should be the % on the duty only.

James Wiley

Wrong Mallouin,

The price must increase by the duty, plus the resulting increase in GST so a 10% increase in duty results in a 10.5% increase in price to the consumer and all without the retailer making any additional profit.

Then the retailer must bare additional costs on top of this such as bank charges (which are also turnover based) and credit and debit card charges which are also turnover based.

Of course the additional capital required to hold stock at the new levels of duty is greatly increased (a retailer having perhaps 1,000 packets of cigarettes on their shelves) and is not without a cost.

So if duty goes up 10% then the retail price would need to rise by around 15% for the retailer to make the same amount of profit.

If the retailer instead chooses to spread this out by overcharging in the first few months and undercharging in the later months then it all works out in the wash and leads to lower prices for consumers.

Can I have my money for the consultation now?

mallouin

He who knows all and is so smug about it,I was commenting on the 'duty' increase not the wholesalers/retailers extra mark-ups that is their affair however I would point out that their "costs" are incurred at many points during the financial year due to price/services costs rising or falling and there is no reason to inflate their charges to the public using duty as an excuse.It's called good business practice/greed,you choose.

Common Sense

This really has nothing to do with Senator Ozouf. From what I understand the independant retailer makes around 15% profit margin on cigarettes. Who in their right mind would sell something today for around the same as what it's going to cost to replace it tomorrow? The only one ripping off the customer is The Staes Of Jersey who continue year after year to increase their profit with duty rises.

The excuse for putting up duty year on year is to try and stop people smoking. Well Senator Ozouf it looks like the wholesalers and retailers are helping you out, so why complain?

You've had your share of the cake already.

What we need is real business leaders in The States not what we have now.

Lewton

This is the same man that has spent five million on consultation for the new police station which if it were on Jupiter would be a better place, now that is ripping off the tax payer

ex-resident

Maybe someone 'in the know' could save taxpayers even more by saving the cost of yet another 'investigation'. The un-informed States Member needs to be aware that the retailers have a limit applied to their orders by the wholesalers when a tax increase is announced - based on the retailers 'average, normal' order.

Simple eh!

ex-resident

Furthermore, refer back to the comments in the house re increased duty on tobacco - are they not trying to save all you poor ignorant people from yourselves??

Alan

simple's really why are the states taxing them anyway they don't run the industry do they.how much tax including GST Import duty all taxes do they charge on the product ?they've got some nerve really a product that is proven to kill surely they should be made illegal no it's just a cash cow and now there trying to pass the buck

Kidder

Ozouf is a hypocrite. Going to put tax on fuel up but it gets knocked back.

Throws the toys out and then puts 50p on fags instead of 38p genius.

Now he's havin a go at the shop keepers. Unreal. hope everyone packs in then see what stephen Hawkins does, gst goes up to 10percent ????

Rentokil

Since supermarkets grew too big for their boots ( over here anyhow) the pleasantries of shopping are all but gone. Greed, profit, masses of profit and a massive burden to the tax payer by way of pricing and subsidising their staff.

Propping up people and too many and every small nice personal touch where you know the staff (properly in shops ) where they are from and what they are about.. Is rapidly disappearing.. It's really not good! Visit a local still managing to try and be a local shop.. Or boycott greedy places..

Just everyone stop spending as much as they can in these places.. Seriously if you don't smoke bring back duty free for someone who does (within allowances) stop giving your money away!!

john

Stop wasting tax payers time and money Ozouf.There are far more important things to be investigating.Get your head out of the sand.Retailers can charge whatever they like for a packet of fags.Its called a free market.And what happens if he does waste time on an investiagation and reatailers are found to be profiteering,what will happen absolutely nothing!How about looking at what a rip off Jersey Telecoms are or why businesses don't pay any tax.This story is just a smokescreen to hide more serious issues

Warren J

I see nothing wrong with retailers speculating and buying in at pre - increased prices - Its like the public at large buying Pay Cards up front prior to the annual increase.

Speculation can have its advantages, bit like buying forward if you have a future EURO commitment !!!

TheMoaningOldBugger

It's called, making a profit!!!!!!!, WHy has it taken so long for the boy O to realise that this has happened at EVERY tax rise since I started in retail in 1976. If he did,nt put up such a big hike on the cigs, he still would be none the wiser

ragpud

this has been happening for years ! i paid £7 for a pack of sik cut from a vending machine on new years eve. just another ploy to keep the tourist away. the island is getting far too expensive

The Scratcher

Hmmm! Why not investigate the 'closed shop' of the legal profession? Err no, too many potential voters and mates there! What about introducing duty on boat fuel? Gosh no, too many glitterati there! Couple of old tobacconists? Yes, investigate! Good front page stuff, public will think I am a top bloke and won't realise they are being 'spun like a top'! One suspects that the 'spin advisors' have a list of stories that Phil can use to get his face and name in the media. (No, surely not!); who'd have gessed!). A steady drip. Never comes to anything of course; but rest assured, the 'artful dodger' will be saving his big tricks for his election campaign! Phil, think about the lessons of 'New Labour'. The spin got so out of hand, the trust evaporated and ultimately led to their electoral ruin.

Chris Howard

A blatant early bit of electioneering from the soon to be ex Senator Spinning Phil. He must be really worried. Just look out for more pronouncements from the little rich boy and don't believe a word of it! Taxi for Ozouf.

S2

Where is there any proof that they are doing this. And what about if Ozouf actually lowered duty, then the stores would lose out.

Look hos much profit they're making compared to the duty lumbered by Ozouf. Hypocrite.

JSY bOY

So whats new - this has gone on for years and the importers have made massive profits, I am amzaed that the states have not spotted this before hand ( but then thats always the way)

Peolpe have to make a profit ... and its nice to be able to make a little extra in these times of declining sales and increasing taxes.

tony

Retailers have been speculating by stocking up with Tobacco for over 20 years now, pre-duty increase. Has Ozouf only just found out! Nothing wrong with doing this by the retailers, its sensible to to take of advantage of this. More electioneering from Phil I'm afraid - rather sad to see how deperate this man is to stay in politics.

You may be losing some of your duty this year due to retailers stocking up, but have you though about cutting costs within the States instead of targeting user pays.

Sensible

As long as the correct amount of duty is paid to the States then its none of his business....its called running a business. It doesn't take a (part qualified!) accountant to realise this. Speculation is the father of enterprise Boy O....

Sanity

Nobody is being exploited; this is simple entrepreneurial skills being used in recognising and taking advantage of an opportunity created by the Senator.

Senator Ozouf should be taking note and learning from people with business experience and applying these lessons to managing our own Island finances. The lesson should be that further tax increases could be absorbed by the local industry in these “super” profit margins without adversely distressing the market.

It should also be a wakeup call to the public that we don’t exactly have the sharpest pencils in the tin running our shop, but that if we did, taxes would be lower and our economy in far better shape. In the forthcoming debate bought about by the Constable of St Saviour that she considers a States members salary to be far too much for what she contributes. We could end up replacing our old pencils with crayons.

Kermit

The retailer would not be doing that if the first place if the States weren't trying to rip the smoker even more. As if Ozouf really gave a dam about it !!! You were the one putting the prices up...

jim

ok ozouf what about the jec putting up electric by 10 percent but using the oil to run the genarators which was bought before 2013 you are a waste of space ozouf stand down and let in real accountants

Dara

Jim, Philip knows a couple of real accountants which he asks if he gets any tricky questions. He regards them as his best friends and they are really interesting people.

Septic Syril

Well yes, much the same way as Lucrezia Borgia found her family interesting!

Still, he's working hard for us, his words, not mine, (following his Blackberry bill being the highest!). One suspects he's on the phone to himself. Who else would believe the spin!

JEAN THE BEAN

Phill it’s been going on since duty was first put on booze and cigarettes must be election year muppet

Chris Howard

Election Year? Sadly not, so we are going to put up with more nonsense from Phil for ages yet and it will be a while longer until Phil gets kicked out and joins the unemployed. Can't wait to see him down the social!

Mario

Less than 2 years and counting! Hopefully even the dummy electorate will have had enough by then!

Smokers cough

Exploiting a dominant market but not a monopoly like the JEC. Part States owned of courses so its ok to be exploited by the States. Retailers are just doing good business, buy cheap, sell for as much as you can. I wonder if old flaky phil has any sense of the commercial world at all - course not, he's never had to do a days proper work in his life. He might have to come the next election ! Taxi for flaky phil !

The Charabanc

Taxi? Better still, a bus, so he can take his numerous cronies with him! Have you ever seen such cronyism. Even old Tony Blair would be proud!

Mario

Yes the good old JEC. Time for competition me thinks!

Benson H........

My wife & I both smoke,that's OUR CHOICE,nobody else's.We don't end up at A+E on a weekly basis due to over indulgence of our"disgusting"habit,unlike booze fueled nights out,booze fueled nights in.......We don't have the police knocking on our door at stupid o'clock,or spending a night in the cells or at Hotel La Moye due to excessive smoking.....

Yes smoking is bad for you,but so is booze,as when we went to the pub for NYE,the price for 2 drinks nearly killed me!!If the States want people to give up smoking,then pay for their course to do so,instead of spending taxpayers money on gash & children having children,(another subject).

C Le Verdic

Why not give it up, then, and start enjoying a better life?

At least, by the sound of it you have got enough sense not to take to the bottle instead!

By the way, very few of us are fooled into believing that smoking is OK just because drinking is as bad or worse.

Benson H........

P.S.We both do manual jobs so our pay isn't great,pay our taxes & social.