Sales of cheap cigarettes in Spain are booming according to a study published by El Pais this month. In 2004 cheaper brands of cigarettes (i.e. between 1 and 1.7 euros) represented 9.5 percent of all cigarettes sold in Spain. So far this year however, sales of cheaper brands have shot up and now represent 28 percent of the Spanish tobacco market.
Low-priced cigarettes mean that the government will find it even harder to reduce the number of smokers among the main target group of the Health Ministry’s anti-smoking campaign – children and adolescents.
Moreover, booming sales present the Spanish Treasury with further problems, partly because the tax put on cheap cigarettes is negligible, and partly because health problems caused by people who are able to indulge their habit thanks to the existence of cheap brands represent a further strain on funding of the Spanish national health system.
In theory the Spanish tax office could put a minimum tax on cigarretes.
As legislation stands now, the tax on a packet of cigarretes that costs 2.8 euros is 1.6 euros, whereas the tax on a cheaper brand is half that at about 80 centimos. The government could establish a minimum tax, so that the cheapest brands have to pay as much as normal-priced cigarretes. Last year cigarette taxes contributed 7,400 million euros to the Treasury.
This year the sales of cheaper brands is expected to reach nearly 30 percent total cigarette sales, representing an unprecedented shift in the tobacco market in Spain.