Monday, June 22, 2009

Phillip Morris Plays Sin Tax for Tobacco Monopoly; expect inflation in food prices

Government needs to keep it's hands out of business, everytime they touch it they screw it up for everybody.

The nation's largest tobacco manufacturer, Philip Morris, USA, has come out in support of the legislation. Its parent company, Altria Group, said in a statement that on balance, "the legislation is an important step forward to achieve the goal we share with others to provide federal regulation of tobacco products."

Its main rivals, however, have voiced opposition, arguing in part that FDA restrictions on new products will lock in Philip Morris' share of the market.

Altria is the parent company of Phillip Morris. They also own Kraft Foods, Nabisco and a few other food companies.

Phillip Morris can allocate the tax expense to these food companies through their products, as noted the costs of taxes will go to the consumer.

Reynolds, of Camel Joe does not have an alternative market to allocate tax expenses to in order to keep the costs of cigarettes competative.

The tobacco market is marketed to the classes, not the masses. The optimum price is achieved when demand meets supply. With the tax, the supply is reduced for affordability purposes and prices go up. Phillip Morris can keep that equilibrium down for affordability purposes.

So, expect inflation in food prices. Especially if they're produced or sold by either Altria or Phillip Morris.

Who wants to bet that either Altria or Phillip Morris makes an aggressive bid for Reynolds?

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