Spain's Tobacco Industry Contributed a Record €89.65 Million in Taxes

According to a report by the Spanish American News Agency on April 9th, despite the Spanish Ministry of Health launching a comprehensive crackdown on the tobacco industry, tobacco products contributed a total of 89.65 million euros to the treasury in the past fiscal year, including 72.10 million euros in specific taxes and an additional 17.55 million euros in value-added tax. This figure not only represents a 2% increase in tax revenue compared to last year, but also signifies a historic high for tobacco tax revenue. Even though cigarette sales volume decreased by 2.91% last year, the increase in prices resulted in an overall rise in tax revenue. Data from the Spanish Tobacco Market Commission (Comisionado del Mercado de Tabacos) shows that cigarettes are the main source of specific tax revenue, contributing a total of 63.28 million euros in tax revenue, a 1.5% increase from 2022.

Despite the Spanish government's intention to raise cigarette taxes in order to increase prices and reduce consumption, such measures have not had the desired effect globally. Instead, the proposed actions have resulted in an increase in illegal activities, including smuggling and counterfeiting. Within the industry, concerns are growing that this could be the future for Spain. Following approval of a comprehensive plan for smoking prevention and control, Health Minister Mónica García began the process yesterday to consult the public on proposed amendments to Royal Decree 579/2017 by April 23rd.

This royal decree covers some issues related to the manufacturing, presentation, and sale of tobacco, including the prohibition of additives in tobacco and related products, such as e-cigarette vaporizers. After the regulation is modified, all cigarette packaging will be standardized, and the space for brand identification will be minimized. This practice has already been implemented in countries like Australia, France, Norway, and Denmark, but it has sparked strong opposition within the tobacco industry in Spain, as they believe it is equivalent to infringing on brands and will not achieve the desired effects.

However, the Minister of Health insists that scientific evidence shows that the new packaging is an "effective" measure. "It helps the packaging itself no longer act as advertising, reducing its attractiveness, and also helps in making the decision to quit smoking," he explained. Despite strong opposition from tobacco companies and retailers, the Ministry of Health still plans to reform the regulations. The Minister of Health emphasizes that any business interest group trying to influence the priority of protecting public health will be obstructed.

On the other hand, the anti-tobacco plan also includes equal adjustments to tobacco-related products such as e-cigarettes and traditional tobacco products. In addition, the collaborating finance department will increase taxes on new tobacco products, with the aim of using this tax revenue for health policies and further increasing taxes on traditional cigarettes. The government's plan is also to reduce smoking-related illnesses by increasing smoke-free areas.

In Spain, 140 people die from smoking every day, and 460 teenagers start trying smoking habits daily. Additionally, the plan involves research on tobacco and its health effects. The Ministry of Health also plans to implement this plan with the support of five regions, even though all other regions are against it. This plan was passed with a 90% approval under the guidance of Health Minister Monica García, with the 90% proposals sent from the autonomous regions to García's department. One of the new features of the final proposal is the elimination of the ban on smoking in private spaces such as cars, when children or pregnant women are present.