Excessive profiteering by big tobacco companies..

April 2, 209 - The Council of Independent Tobacco Manufacturers of America (CITMA) has condemned major US manufacturers for increasing cigarette prices ahead of the April 1 hike in the US’ federal excise tobacco taxes.

Philip Morris claimed that the price increase was necessary to address floor stock taxes brought about by the Federal Excise Tax (State Children's Health Insurance Program - SCHIP) legislation passed in February 2009,’ CITMA said in a press note issued by PRNewswire. ‘In fact, Philip Morris's price rise was three weeks ahead of the SCHIP tax increase.’ (Floor stock taxes - on Wednesday, April 1, 2009 when the tax takes effect, the wholesalers and retailers had to pay for what they own on that day. This "floor" tax requires them to pay 62 cents for each pack of cigarettes they own that day, and this is on top of higher prices cigarette manufacturers are charging.)

Kevin Altman, a CITMA representative: "This is just big companies using their market power to drive up their profits at the expense of adult consumers."

This pricing pattern is consistent with the behavior of the major tobacco
companies related to the cigarette Master Settlement Agreement (MSA). After that Agreement was signed in 1999 by the states and the major companies, in lock step, those companies raised prices to new highs. Profits at the major companies increased substantially and reached record levels, and all at the expense of consumers.

This most recent excessive price hike has provided substantial profits to
Philip Morris at the expense of consumers. "By adding an extra $6.17 under the
pretense it was wholly related to the increased tax to support health care, Philip Morris and the other large tobacco companies, continue to undermine the confidence of adult consumers. This latest hike only helps promote a negative perception of the big companies leveraging the market dominance that was created for them as a result of the cigarette MSA," stated Altman.

Related news brief: C-store chain upset that tobacco manufacturers raise prices early..

Reference: SCHIP Tax Increases Spurs Profiteering by Philip Morris and Other Big Tobacco Companies.., SOURCE Council of Independent Tobacco Manufacturers of America, Reuters, 4/1/2009.