Abstract
Background: In recent years tobacco taxation in Spain has regressed, with its Tobacconomics tax scorecard falling from 3.9 points (out of 5) in 2014, to only 2.625 in 2020. The objective of this research is to provide a detailed analysis of the causes behind this deterioration and identify possible ways forward for reversing this trend.
Methods: A retrospective 2014-2022 analysis of manufactured cigarettes (FM) and roll-your-own tobacco (RYO) markets including tax structure/rates, affordability, retail price gaps across products, and price differentials with bordering countries. A market level simulation model to 2028 studied the impact of various tax policy scenarios on smoking prevalence, premature deaths averted, smoking intensity, product substitution, government revenue, sales, and industry profit.
Results: A lack of tax increases in a context of inflation and income growth during the past 8 years means FM and RYO have become 13% more affordable, with a constant differential of €2 between 20 FM and RYO sticks, and the price gap between Spain and neighbouring France increased. Modelling of two realistic reform scenarios that reduce/eliminate the price gap between FM and RYO suggest substantial increases in government revenues and up to 700,000 fewer smokers and 210,000 fewer premature deaths.
Conclusion: Current European Union legislation on tobacco taxes leaves ample room for much needed tobacco tax reform. For the sake of both public health and the economy, Spain should increase its Minimum Excise Tax. This would not only save lives, but also bring much needed revenue for the government.
Methods: A retrospective 2014-2022 analysis of manufactured cigarettes (FM) and roll-your-own tobacco (RYO) markets including tax structure/rates, affordability, retail price gaps across products, and price differentials with bordering countries. A market level simulation model to 2028 studied the impact of various tax policy scenarios on smoking prevalence, premature deaths averted, smoking intensity, product substitution, government revenue, sales, and industry profit.
Results: A lack of tax increases in a context of inflation and income growth during the past 8 years means FM and RYO have become 13% more affordable, with a constant differential of €2 between 20 FM and RYO sticks, and the price gap between Spain and neighbouring France increased. Modelling of two realistic reform scenarios that reduce/eliminate the price gap between FM and RYO suggest substantial increases in government revenues and up to 700,000 fewer smokers and 210,000 fewer premature deaths.
Conclusion: Current European Union legislation on tobacco taxes leaves ample room for much needed tobacco tax reform. For the sake of both public health and the economy, Spain should increase its Minimum Excise Tax. This would not only save lives, but also bring much needed revenue for the government.
| Original language | English |
|---|---|
| Article number | ntae162 |
| Pages (from-to) | 46-53 |
| Journal | Nicotine & Tobacco Research |
| Volume | 27 |
| Issue number | 1 |
| Early online date | 6 Jul 2024 |
| DOIs | |
| Publication status | E-pub ahead of print - 6 Jul 2024 |
Data Availability Statement
The data underlying this article will be shared on reasonable request to the corresponding author.Funding
ALN and HR are funded by the University of Illinois Chicago’s (UIC) Institute for Health Research and Policy through its partnership with Bloomberg Philanthropies. JRB received funding for this work from Bloomberg Philanthropies, as part of the Bloomberg Initiative to Reduce Tobacco Use. The funders played no role in the research.
Keywords
- Spain
- Tobacco
- Price
- Public Policy
- Taxation
