The tobacco industry is revolutionized by the growth of Tabacalera Sarandí, a Buenos Aires SME owned by Argentine businessman Pablo Otero, which
in the last eight years managed to go from 5% of the market to more than 30%
, according to specialist estimates, displacing the traditional international companies, thanks to the fact that they would be under-invoicing the price of their cigarette packages before the AFIP and that they obtained judicial precautionary measures that allow them to pay less taxes and sell their products much cheaper than their competitors.
Otero also accumulated
proverbial lobbying power
, which includes a political leg, a judicial leg, and a media leg.
At the beginning of the year, Tabacalera Sarandí paid taxes "as if its three main cigarette brands cost their packages in kiosks between $256 and $278, while their products were sold in kiosks between $600 and $800.
Who kept that difference?
Otero and a mafia of politicians, judges, spies, journalists, media and AFIP inspectors," an industry specialist told
Clarín
.
And he added: "How many articles have you seen published on this issue, which generated an evasion of a billion dollars per year? Does no one see anything?"
According to a report by the consulting firm Abeceb, from last January, this type of practices by Otero's company and other much smaller tobacco companies, but that act in the same way, allowed them to grow their share in the cigarette market sharply. going from 5.6% of the total in 2016 to 38.4% in 2023, generating
an "accumulated collection loss of US$ 5,823 million, between the years 2018 and 2023."
The fact is that 76.9% of the price of a pack of cigarettes are
taxes charged by the national State, to discourage consumption.
This percentage includes internal taxes, VAT, the Special Tobacco Fund - which is distributed to the producing provinces - and the Social Assistance Fund, among other taxes.
Due to this imbalance in competition, in 2019, Philip Morris closed a production plant in the province of Corrientes and laid off 220 workers there.
At that time, the company reported in a statement that "the decision to cease activities at the Goya plant responds to the fact that in recent years the company's sales have been reduced, mainly due to the increase in the market share of
companies that "they don't pay the corresponding taxes"
But if Otero's company pays much less in taxes, then its prices drop, revenue for the State and the provinces falls, competition becomes unbalanced and cigarette consumption increases, generating
a problem not only tax but also public health. ,
since tobacco consumption kills 45,000 people per year in Argentina, 14% of the total deaths, according to a report by the UBA University Hospitals Network.
Furthermore, this tax distortion led by Tabacalera Sarandí caused that, between 2018 and 2023,
cigarette consumption had an interannual increase of 1.2% in Argentina
, while the world average decreased cigarette consumption by 2% each year, according to the Abeceb report.
The tobacco industry in the Omnibus Law
To try to solve this problem, at the end of 2023 the Government proposed
the need to modify the tax criteria for cigarettes, in 10 articles of the Omnibus Law project
that it sent to Congress, raising the tax collection.
But its treatment was blocked in that first parliamentary instance, with strong discussions in the tobacco chapter.
“We are not going to be accomplices to the businesses of some", such as "the Lord of Tobacco",
who "lobby and 'persuade' politicians to defend their interests," said President Javier Milei, when withdrawing the Omnibus Bill of Law. the Chamber of Deputies, when he accused “the caste” of this setback, which he identified with governors, opposition politicians and a sector of the business community.
The “Lord of Tobacco” is Pablo Otero
, according to four sources consulted by
Clarín
.
Otero is a businessman with a very low profile in the media, but well known in the tobacco industry, since in the last five years
he managed to surpass British American Tobacco Argentina
(BAT, former Nobleza Piccardo) in sales and challenge it for first place. in the sale of cigarettes to the Philip Morris company - which also produces Marlboros -, with a very aggressive strategy against Justice, the political leadership, the AFIP and the media.
For Otero, "the fact that the President has referred to a 'Tobacco Lord' may be related to the person who promotes the Massalin Law.
If he referred to me, it is because he does not know me
and is part of the
cowardly demonization carried out by Massalin and his journalists with envelopes," he told
Clarín.
In fact, this controversy in the Omnibus Law, together with
the entry of one of Otero's companies into the Net TV channel
, revealed a discussion that until now took place especially behind closed doors of the tobacco industry.
At the beginning of the year, Net TV reported that the National Communications Entity (ENaCom) approved the entry of
Grupo Madero Sur into the television channel,
making the company that owns Tabacalera Sarandí its minority shareholder, leaving 70% for Editorial. Profile, 22.5% producer Kuarzo and 7.5% for the Otero company.
In any case, Otero clarified that "we did not enter Net TV through Tabacalera Sarandí, but through another corporate entity in which we have interests in the field of entertainment and culture. The intention is to
enhance our commercial presence through various means promotion
," the businessman told
Clarín
.
And he added that they have "no connection with other local media or politics."
However, it was in one of Editorial Perfil's media outlets where Otero spoke at the beginning of March, in an interview where it was not clarified that the businessman is one of the shareholders of one of Perfil's companies.
There Otero stated that the Tabacalera Sarandí company was created in 1998 and
has an "annual turnover" that "amounts to nearly US$ 800 million
and we contribute more than US$ 500 million in various taxes annually."
In that interview, Otero harshly questioned
the Omnibus Law project, which he described as "Massalin Law Season 3"
.
And he said that "it represents a common practice carried out by multinationals to monopolize the market. Both BAT and Massalin have established their own rules at least since the '90s, through Collection Agreements with different governments, which were never fulfilled. ".
Also in Perfil they published another note at the beginning of the year titled "National tobacco companies accuse the Government of favoring multinationals in the sector in the Omnibus Law",
with statements by Otero.
In an expansion of that position, Otero now pointed out to
Clarín
that "if there was lobbying for the sanction of the Massalin Law (for the Omnibus Law), it was definitely not on our part. What official would think of taxing the IQOS, cigarette electronic, being prohibited? It is evident that the law is written by and in favor of Massalin.
That is comparable to wanting to tax marijuana for when it is legalized
. "
And he added: "We are not concerned about the approval of IQOS, which is a captive market for Philip Morris, nor about the ridiculous proposed rate, although the industry recognizes that heated tobacco is more addictive than conventional cigarettes. Yes Massalin success with IQOS makes us very happy, but
we are not willing to close a 30-year-old company
to please a corporation that seems to think it owns the country.
The Omnibus Law project eliminates the fixed component of the cigarette tax, which is prosecuted by Tabacalera Sarandí, raising the variable tax rate from 70 to 73%;
It incorporates reference market prices,
to be used when the reported sales price to the consumer is less than 20% of the surveyed price;
and incorporates a calculation of sanctions based on the market prices surveyed, in the case of products without documentation or with irregularities.
This would
increase collection by US$922 million per year, 24.6%,
according to the consulting firm Abeceb.
It could also impact revenue if the distribution of vapes and electronic cigarettes is authorized, which if authorized would pay 20% taxes, according to the official project, a very low percentage in relation to the taxes paid on cigarettes, according to Otero stated to
Clarín
.
Politicians, power and impunity
Libertarian deputy
Carlos Zapata questioned Javier Milei's Omnibus Law because it creates “a Gestapo of prices
” against some companies that sell cigarettes.
"Nothing is further from liberalism than setting up a price Gestapo to supervise the prices at which taxes must be paid," insisted the deputy from La Libertad Avanza (LLA), in statements to Radio Rivadavia, in line with what Otero had proposed, who also spoke using the word of the "Gestapo".
The project
gives the Ministry of Health the possibility of monitoring the price
at which companies sell cigarette packages, given the inaction of the AFIP in going to the kiosks to check at what price Tabacalera Sarandí and other companies sell their packages. .
Libertarian intern against Milei?
The Salta deputy Zapata (LLA) also assured that several articles of the Milei project were
included "at the suggestion of some market actor"
, but that he will try to modify that official project.
Zapata would be one of the deputies who would lobby for Otero, according to journalist Carlos Pagni.
But he's not the only one.
According to what Pagni published in the newspaper La Nación, "the multinational" tobacco companies also "identify" Cristian Ritondo and Diego Santilli
, from the PRO, among others , behind efforts in favor of Tabacalera Sarandí
.
Pagni said that the discussion over the tax on tobacco companies "threatens to become a scandal."
And that Otero's company "would have turned to
great underworld celebrities for this dispute: from Antonio Stiuso to Adrián Kochen."
“Argentina is the only country in the world where cigarette consumption is increasing, because one of the main tobacco companies sells its cigarettes very cheap, by stopping paying a significant percentage of taxes.
There is a gigantic web of corruption, from the AFIP and Justice, to spies and political leaders from all parties, who at first were only from the PJ, but that 'cooperative' was expanded so that many more
finance their campaigns with black money from the
tobacco,” a political leader, who asked to remain anonymous,
warned Clarín .
Businessman Otero is a millionaire and eccentric character, who some define as a "gentleman driver", since he is
the only Latin American who races in the Porsche Mobil Supercup category
- and the oldest -, contributing from his own pocket the large costs that has motorsports.
Market specialists, politicians and businessmen competing in the tobacco industry accuse him of “buying precautionary measures in Justice”, “associating with spies” from the Federal Intelligence Agency (AFI), “pressing people with the trials and document letters they send from the study of Maximiliano Rusconi" and
"finance the political coffers
with a part of the 500 million dollars annually saved in paying taxes," his critics told
Clarín
.
But Otero defends himself, before Clarín
: "Tabacalera Sarandí pays US$500 million a year in various taxes, including 'ad valorem' internal taxes. Our prices have increased in line with inflation in Argentina. In 2018, we had a market share of 12%, and today we reach 33%, largely due to the decrease in purchasing power and the rise of second brands."
The discussion on the Omnibus Law project revealed an area of opacity, where
almost a billion dollars are evaded per year,
despite the fact that it is an activity that should be easy to collect, as happens in most countries.
At a time of economic crisis like the current one, the debate on this issue is not only a question of how to help resolve the fiscal deficit, but also
a health issue, to try to avoid thousands of deaths derived from smoking,
such as breast cancer. lung and see how to reduce the number of cigarettes that Argentines smoke each year.
Argentina signed the Framework Convention on Tobacco Control (FCTC), of the World Health Organization (WHO), on September 25, 2003. But due to various interests of the industry and its lobbyists, as occurs with tax evasion , is the only country in the region that
more than 20 years after that signature was still unable to obtain legislative ratification
to begin mitigating the impact of smoking on the population.