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Taxpayers footing bill for standard packs dust-up

| July 28, 2015

More than A$50 million of taxpayer money is expected to go up in smoke as the Australian government defends cigarette standardized packaging in a secretive international tribunal in Singapore, according to a story by Andrew Probyn for the West Australian.

But costs will become much higher if Australia loses its first defence that Philip Morris indulged in ‘venue shopping’ by shifting its headquarters to Hong Kong to sue Australia.

Australia alleges that Philip Morris, in anticipation of the then Labor government’s standardized packaging legislation in 2011, restructured itself so that its Australian subsidiary became wholly owned by the Hong Kong-based Philip Morris Asia.

This allowed Philip Morris to sue Australia under investor-state dispute settlement (ISDS) provisions of a 1993 bilateral agreement between Australia and Hong Kong that allowed compensation for ‘expropriation’ of investments.

A spokesman for Philip Morris was quoted as saying that governments had the right to “experiment” with taxpayers’ money but should not be surprised when companies and countries asserted their rights.

“Philip Morris is seeking compensation from the Australian Government for its plain packaging experiment which deprives us of our brands and intellectual property, and for treating Philip Morris and its investments unfairly and inequitably through changing arbitrarily our legal and regulatory environment,” the spokesman said.

“Our claims address the unlawfulness of the expropriation of property and do not question the need for comprehensive regulation of tobacco products.”

The full story is at: https://au.news.yahoo.com/thewest/wa/a/29064155/tobacco-giant-sues-australia/.

Andhra leaf growers press Delhi for compensation

| July 28, 2015

A delegation of tobacco growers from the Indian State of Andhra Pradesh is planning to travel to New Delhi on August 5 to press the union government for compensation following a decision to slash the state’s flue-cured production target, according to a story in the Hindu.

Earlier this month the 2015-16 authorized flue-cured crop for Andhra was cut by 30 percent from that of 2014-15.

The Tobacco Board decided – based on indications given by the Indian Tobacco Association (representing tobacco manufacturers, dealers and exporters) – to fix the crop size for 2015-16 at 120 million kg as against 172 million kg for 2014-15.

The board decided also to limit the production strictly to the authorized crop size by dealing ‘sternly’ with excess production; so as to ensure fair and remunerative prices to growers, according to a board press note.

It was reported that the board had reduced the size of the crop for 2015-16 after taking into consideration the gloomy situation on the world market, the presence of carryover stocks, declining demand for tobacco on the domestic market and growers’ demands for ‘remunerative prices for their produce’.

Meanwhile, the board extended the flue-cured tobacco auctions currently being staged in Andhra until September because of the slow rate of sales. Flue-cured auctions typically take place from January to July in Andhra and from September to February in Karnataka.

The delegation aims to meet Union Commerce and Industry Minister Nirmala Sitharaman and Finance Minister Arun Jaitley to press the government to announce a compensation of Rs1 million (US$ 15,600) for every tobacco barn that is dismantled because of the decision to reduce the crop size.

The growers also want the board’s trade wing to purchase this season’s low grade tobacco at Rs75 (US$ 1.17) per kg and medium grade tobacco at Rs110 (US$ 1.72) per kg.

The growers noted that while the Health Ministry wanted to phase out tobacco cultivation in line with the World Health Organization’s Framework Convention on Tobacco Control, the Commerce Ministry was trying to increase tobacco exports.

Logic part of JT’s emerging-products ambitions

| July 28, 2015

Japan Tobacco Inc. said today that the JT Group had completed the acquisition of Logic Technology Development, one of the leading US e-cigarette brands.

The acquisition was first announced at the end of April 30.

Founded in 2010, Logic is said to sell a range of high quality rechargeable, ready-to-use and disposable products, including the Logic Pro tank system.

‘The investment in Logic provides JT Group with a sizeable participation in the largest and fast-growing US e-cigarette market,’ JT said in a note posted on its website.

‘Logic’s well established presence in the US, in addition to the acquisition of E-Lites in the UK, further underpins the group’s global ambitions to become the leader in emerging products.’

JT said the acquisition was expected to have a minor effect on the group’s consolidated financial performance for fiscal year 2015.

Universal to webcast results conference call

| July 28, 2015

Universal Corporation is due to webcast a conference call that will be held from 17.00 Eastern Time on August 6 following the release of the company’s results for the first quarter of fiscal year 2016 after market close on that date.

The conference call, which will be in listen-only mode, will be hosted by vice president and treasurer Candace C. Formacek.

The live webcast will be available at www.universalcorp.com, where a replay will be made available until November 4.

A taped replay of the call will be available from 20.30 on August 6 through August 19 at (855) 859-2056 using the telephone replay identification number 95972066.

Hungary threatens penalties for tax policy complaint

| July 27, 2015

Hungary will not shy away from penalizing retailers and tobacco companies further for lodging tax complaints with the European Commission, according to a Portfolio story.

“We are not planning to surrender to the European Commission with respect to the special taxes on the retail and tobacco industries,” Janos Lazar, minister leading the Prime Minister’s Office, told journalists.

Earlier this month, the Commission opened two separate ‘in-depth’ investigations to examine further whether two recent Hungarian tax measures with steeply progressive rate structures were in line with EU state aid rules. One measure concerned a tax on turnover from the production of and trade in tobacco products.

‘At this stage, the Commission has concerns … that the progressivity of the rates based on turnover provides companies with a low turnover a selective advantage over their competitors, in breach of EU state aid rules,’ the Commission said in a press note.

‘The Commission has also issued injunctions, prohibiting Hungary from applying the progressive rates until the Commission has concluded its assessment.

‘The opening of in-depth investigations gives interested third parties the opportunity to comment on the measures under assessment. It does not prejudge the outcome of the investigations.’

This year, Hungary introduced a new tax on tobacco products, referred to as a ‘health contribution’, under which tax rates are steeply progressive; so companies with a low turnover are liable to pay a tax of 0.2 percent of their turnover from the production and sale of tobacco products, while companies with a higher turnover are subject to a rate of up to 4.5 percent of their turnover.

‘The Commission looked into the issue because it received a complaint,’ the press note said.

‘The Commission welcomes member state measures to reduce tobacco consumption. However, it has doubts that the effects of tobacco products on public health increase progressively with the turnover of companies selling them.

‘Because of the progressive rates, companies with a low turnover pay substantially lower taxes than companies with a high turnover. So far, Hungary has provided no objective reasons that would justify a differentiated treatment between companies with different turnovers.

‘The legislation also allows companies to reduce their liability under this tax if they make certain investments in tangible assets. The Commission is concerned that this may grant a selective advantage to such companies, and Hungary has not at this stage demonstrated that the reductions are compatible with the single market.’

Under EU law, member states are competent to decide on their taxation systems. However, member states have to ensure their tax systems respect EU rules on state aid (by not granting selective advantages to particular companies) and on the single market (e.g. by ensuring the freedom of establishment, free movement of goods, services and capital, and non-discrimination between domestic products and those from other member states).

“Rest assured, these companies will pay more than the originally planned 40 billion forints, said Lazar. “They will pay so much more that it will discourage them from reporting Hungary.”

He added that the higher burden could be expected in the new tax year.

Government ‘hand in glove’ with tobacco industry

| July 27, 2015

While India had signed up to the World Health Organization’s Framework Convention on Tobacco Control, it had failed to initiate even the first steps towards honoring the agreement, according to a story in the Times of India.

The Union government, mainly due to pressure from the tobacco lobby, had never seriously initiated policies aimed at ‘banning’ tobacco in any form.

“The government is hand in glove with the tobacco industry,” Dr. Prakash Gupta, an anti-tobacco crusader from Mumbai and the director of the Healis Sekhasaria Institute of Health Sciences, Mumbai, was quoted as saying.

Gupta was in the city for a seminar organized by the RST Regional Cancer Hospital on Sunday to mark the World Head and Neck Cancer Day.

“That is the reason why it has never let the Committee on Subordinate Legislation or COSL work and come out with its recommendations.

“How can you have people from the tobacco industry in the committee which is expected to frame legislations against tobacco?

“But despite the evident conflict of interest, representatives of this industry have always been there in the government decision-making bodies.”