As soon as I read that Fidesz wants to make the sale of tobacco products a state monopoly I became suspicious. The legislation, about which naturally Magyar Nemzet learned first, was ostensibly designed to prevent young people under the age of eighteen from purchasing cigarettes. Because, as the story goes, some stores–especially supermarkets and hypermarkets owned by multinationals–are awfully lax. They don’t bother to check the IDs of young people. But, just wait! The new “tobacco shops,” naturally called “national tobacco shops,” will be much more vigilant. Moreover, there will be very few such shops. Towns with a population of fewer than 2,000 will be allowed to have only one such shop. One for every 2,000 inhabitants in larger towns. All told, there will be only 7,000 national tobacco shops in the country. The state will hold a monopoly on the product itself and will establish these national tobacco shops as concessions.
I immediately envisaged 7,000 pro-Fidesz Hungarians as the lucky recipients of these concessions, although some people claim that the profit margin on cigarettes is so low that the owners of the concessions will not make a decent living. But what about a couple, both receiving old-age pensions? Such a shop might be a bonanza for them.
Of course, the idea is not at all new. On the contrary, it is a very old idea. I’m not 100% sure of the date, but it might have been prior to 1950 that the sale of tobacco products was a state monopoly and there were specifically designated shops for that purpose called “trafiks.” They were given out as concessions to older women whose husbands had died in the wars. Naturally, one needed a friend in government service to promote one’s cause. As far as I know, these people made only a very modest living.
Fidesz politicians who concocted this latest brainstorm looked around in Europe to see whether they could find a similar setup, and they came to the conclusion that Austria offered a perfect model. But, reading a bit on the Austrian case, I came to the conclusion that, as usual, the Orbán government is on the wrong track. It is true that until 1998 tobacco was a state monopoly in Austria, but European Union requirements changed “the malign though seemingly cosy participation in government policy of Austria Tabak, the state monopoly that dominated the Austrian tobacco industry.” It was partially privatized. And that is not all. If Fidesz is so worried about the high number of smokers in Hungary, they shouldn’t look to Austria. “If Germany is the bad boy of western Europe, in tobacco control terms, it is high time to meet its little brother. Austria, with just a tenth of Germany’s population, possibly has an even worse record for lack of action to protect its citizens from tobacco.”
So, surely, Fidesz’s eagerness to adopt the so-called Austrian model has mighty little to do with concern over the health of Hungarian youth. Moreover, handing out concessions to 7,000 party sympathizers is not a good enough reason to introduce such a vast change in the retail system. A third possibility, and this is the one I was originally guessing as the driving force, is that the state would like to receive even more money from the sale of tobacco over and above the fairly high excise tax on cigarettes. Well, that’s one of the reasons but there is another one, even more important it seems.Austria’s 8,000 tobacco shop owners are the leading lobbyists against any kind of anti-smoking legislation. The highest number of teenage smokers in all of Europe can be found in Austria. Tobacco shops or not. Worse statistics than in Hungary or Germany.
Although János Lázár, the man behind the proposed legislation, in public seemed to be very sure that the Hungarian law on state monopoly and tobacco shops conforms to European Union guidelines, deep down he must have had doubts because in the last minute the Hungarian government sent the proposal to the European Council asking for final approval. As soon as the text of the proposed law appeared on the European Council”s website, Napi Gazdaság noticed the name of János Sánta, a principal in a Hungarian-owned tobacco company called Continental Dohányipari Zrt. He was the last person who made changes in the proposed law.
It turns out that János Lázár relied heavily on the “advice” of Continental Zrt. all along. A division of Continental Zrt. is actually situated in Hódmezővásárhely where Lázár is the mayor. Apparently Lázár’s relations with the owners of the company are excellent. The piece of legislation was written with a view to giving an advantage to Continental in the Hungarian tobacco market over its competitors. The legislation most likely will result in discrimination against foreign companies like Philip Morris, the British American Tobacco (BAT), and Imperial Tobacco. Currently, these multinational companies account for about 85-90% of the Hungarian cigarette market. Continental’s share is therefore no more than 10-15%. If, however, tobacco became a state monopoly the Hungarian state could decide to which companies it would give purchasing preferences. Continental surely would greatly benefit from such an arrangement.
More and more government edicts and pieces of legislation are aimed at giving an unfair advantage to Hungarian companies over multinational companies, which is illegal under European Union rules. It is therefore unlikely that Brussels will accept this piece of legislation. Apparently, the government has a Plan B for such an eventuality. The government would allow cigarettes to be sold in supermarkets and gas stations, but these outlets would have to buy the cigarettes from the “national tobacco shops.” I don’t think that this modification will comfort the bureaucrats of Brussels.