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New law makes snus users pay more for less

Users of snus, or moist snuff, will get less for their money as manufacturers reduced pouch content by ten percent when the tax on tobacco was raised at the beginning of the year.

Published: 3 January 2012 09:28 CET

New law makes snus users pay more for less

“We do not want to burden our consumers with tax on snus and for that reason we have chosen to reduce the weight of the contents of our products,” said Patrick Hildingsson, Information officer at manufacturers Swedish Match to news agency TT.

The weight of a pouch of snus used to be 1 gramme but has now been reduced to 0.9 grammes at the same time as the price was raised from 47 to 49 kronor – meaning that users get ten percent less, while paying more.

The change has angered Swedish snus enthusiasts, despite the company claiming it is done for the sake of customers.

“It isn’t too great, is it? If they are increasing the price that shouldn’t affect the content,” said one customer to TV4 News in Gothenburg.

“I think it is bad form. You are paying for it. It was the same thing with cigarettes before, although the reduced content of the pack meant you ended up paying more. So I think it is definitely bad form,” another said.

But at Swedish Match they say that it is common practice to do what they have done and that the raised price is due to an increased competition on the market.

“We have to balance our commitment towards our consumers and also fend off our competitors whilst still maintaining our profitability,” said Hildingsson.

Snus is a moist powder tobacco product, consumed by placing either a pre-packed pouch portion or loose pinch under the lip for extended periods of time.

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Beskæftigelsesfradraget: What is Denmark's employment allowance?

What is the employment allowance?

The Beskæftigelsesfradraget (from beskæftigelse, meaning employment, and fradrag, meaning rebate) was brought in by the centre-right Liberal Party back in 2004, the idea being that it would incentivise people to get off welfare and into a job.

Everyone whose employer pays Denmark’s 8 percent AM-bidrag, or arbejdsmarkedsbidrag, automatically receives beskæftigelsesfradraget. Unlike with some of Denmark’s tax rebates, there is no need to apply. The Danish Tax Agency simply exempts the first portion of your earnings from income taxes.

In 2022, beskæftigelsesfradraget was set at 10.65 percent of income with a maximum rebate of 44,800 kroner.

How did the government agree to change the employment allowance in its coalition deal?

In Responsibility for Denmark, the coalition agreement between the Social Democrats, the Liberals and the Moderate Party, the new government said it would set aside 5 billion kroner for tax reforms.

Of this, 4 billion kroner was earmarked for increasing the employment allowance, with a further 0.3 billion going towards increasing an additional employment allowance for single parents.

According to the public broadcaster DR, the expectation was that this would increase the standard employment allowance to 12.75 percent up to a maximum rebate of 53,600 kroner.

How might this be further increased, according to Børsen?

According to a report in the Børsen newspaper, the government now plans to set aside a further 1.75 billion kroner for tax reforms, of which nearly half — about 800 million kroner — will go towards a further increase to the employment allowance.

The Danish Chamber of Commerce earlier this month released an analysis in which it argued that by raising removing all limits on the rebate for single parents and raising the maximum rebate for everone else by 20,300 kroner, the government could increase the labour supply by 4,850 people, more than double the 1,500 envisaged in the government agreement.

According to the Børsen, the government estimates that its new extended allowance will increase the labour supply by 5,150 people.

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