%0 Journal Article 
%A López Nicolás, Ángel
%A Cobacho Tornel, María Belén
%A Fernández, Esteve
%T The Spanish tobacco tax loopholes and their consequences
%D 2013
%@ 0964-4563
%U http://hdl.handle.net/10317/4441
%X Objectives: The Spanish Government has strengthened tobacco control policies since 2005,
including changes in tobacco taxes. Because these changes have targeted cigarettes mainly, the
tobacco industry has marketed cheaper alternative tobacco products, offering smokers the
possibility to down-trade. This paper traces the evolution of patterns of demand for cigarettes
and other tobacco products in Spain over the period 2005-2011 in order to assess the impact of
such tax loopholes.
Methods: We use data on tobacco products prices and sales as well as changes in the structure
and levels of tobacco taxes to relate tax changes to price changes and subsequent market share
changes.
Results: Tax reforms have lifted the bottom end of the cigarette price distribution, but the
industry has been successful in marketing fine cut tobacco at cheap prices. There have been
partial attempts to correct this asymmetric tax treatment, but these have not avoided a
remarkable increase in the market share of fine cut tobacco. The absence of a minimum tax on
quantity for the rest of tobacco products allows the industry to place them as potential future
down-trading vehicles.
Conclusions: In order to address public health objectives, tax policies should aim to
equalise the cost of smoking across different tobacco products. Otherwise the tobacco
industry can exploit tax loopholes to market cheap alternatives to cigarettes. This requires all
tobacco products to bear a minimum tax on quantity, whose levels need to be adjusted in order
to reflect the equivalence between different forms of smoking.
%K Taxes
%K Cigarettes
%K Fine cut tobacco
%K Down-trading
%~ GOEDOC, SUB GOETTINGEN