French smokers risk wealth damage

By Caroline Wyatt BBC correspondent in Paris

France's long love affair with the cigarette could soon be facing extinction.

France has raised tobacco prices by 20% to raise funds for healthcare and help fill the hole in the 2004 budget.

France's deficit is still well above the 3% set by the European stability pact, and the extra tobacco revenues could amount to as much as two billion euros a year.

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But French tobacconists have not taken the price rise lying down and have embarked on a day of strikes.

Until now, smoking has been relatively cheap for France's 15 million regular smokers and 5 million occasional smokers.

But the French Government now sees them as an extra source of revenue, as it tries to fill the budget holes.

On top of today's 20% rise will come a further 20 per cent in January next year.

All this has reignited public anger with the government, not least among France's tobacconists, whose kiosks are found on almost every street.

They are putting pressure on the government, warning that many tobacconists could go out of business with jobs being lost at a difficult time for the economy.

They also warn that the smuggling of cigarettes from Spain and eastern Europe will increase, leading to greater losses of revenue for the government.

Yet the French Prime Minister, Jean-Pierre Raffarin, insists price rises aren't just about filling the hole in government finances.

Budget gap

He and his cabinet argue that the French Government needs to take serious steps to clamp down on smoking, which is one of the major causes of the current difficulties in the healthcare system.

With the French health budget under increasing strain, the government says it makes sense to tackle the roots of ill-health at source - bringing in the extra 2 billion euros, to help with the 10 billion euro budget shortfall in the health system.

Despite the recent clampdown on smoking in public areas - honoured more in the breach than in the observance - the French seem resistant to stubbing out the habit.

More than 80 billion cigarettes a year are sold in France, despite a series of ads warning of the health dangers.

This time, though, these serious price rises mean that French smokers may decide that tobacco seriously damages their wealth.