NEW PRICES

Otago Daily Times, Issue 26633, 2 December 1947, Page 9

NEW PRICES

CIGARETTE TOBACCO PRODUCTION BOOST NEEDED “ We had expected that the Government, when fixing the new prices would give some inducement to the manufacturer to produce more cigarette tobacco, instead of concentrating on the more profitable manufacture of cigarettes,” states the 24th annual report of the National Tobacco Company Ltd. “We have been well treated as manufacturers of cigarettes but the new prices for tobacco are quite inadequate. , _ “We were lucky to get the Government's decision how to compensate us for the loss of subsidy on imported leat still during the currency of our financial year, though it was on the last day when we were surprised by the promulgation- of a new tariff and the fixing of the increase in our selling prices,” the report states “We had been waiting and urging for an adjustment ever since the withdrawal of the subsidy in July last year, but our claims to which we’ were entitled under the Stabilisation Act were met with vague promises that ultimately were never kept.

Entering Chronic Stage

“Apart from the loss of subsidy, our selling prices, which were fixed five years ago, had to be brought into line with the present cost of production. Every item needed for the manufacture of tobacco and cigarettes has since gone up in price, so much so that we were beginning to lose money on ..ome of our brands of tobacco, which loss we had to make good by the profit on cigarettes. The demand for our cigarette tobacco is incredible, but we can only turn out a fraction of what is needed. The shortage has been acute for years and is now entering the chronic stage notwithstanding all our efforts to meet the situation by overtime work. It is cigarette tobacco people want because of the habit oi the smoker to roll his own. This habit has become dear to him and he will accept no substitute in the form of ‘ tailor-mades.’

“If the Government had really wanted to keep the price down for tobacco, the simplest way would have been to reduce the outrageously high excise duty,” the report continues. “ This could easily have been accomplished without loss of revenue, as the larger quantities which could then have been produced by manufacturers would have made up for a lower rate of excise. Instead, yet another impost has been piled on tobacco and we have now to pay a duty of 3s 9d per lb on importr leaf, which we arc using for blending with the New Zealand grown. “This is on top of the already excessive excise duty of 11s 8d per lb and the 10 per cent, sales tax. The combined taxes on a pound of cut tobacco amount to 17s 6d or 2s 3d for a 2oz packet. Smokers therefore, will realise that, every time they purchase a 2oz carton of cigarette tobacco say at a cost of 3s l£d, no less than 2s 3d goes to the Government in the form of taxation, leaving the manufacturer 10A to cover the cost of the leaf, its manufacture and distribution, cost of packing material, profit to the wholesaler and retailer and last but not least income tax. In other words, 70 per cent, of the purchase price is taken by the State and the remaining 30 per cent, divided between grower, manufacturer, merchant and retailer.