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Calls for tax changes in Spain misguided

By July 12, 2018No Comments

Roll your own tobacco products are being targeted in Spain following the release of statistics showing a growth in sales of fine-cut tobacco. Some activists are calling for an increase in taxes on fine-cut as a measure to reduce the smoking rate.

As evidence has shown in other countries this approach is misguided. Aggressive price increases in fine-cut tobacco products only leads to an increase in illegal trade and illegal tobacco consumption. These unregulated and untested products harm consumers and government revenues, and fuel criminal activity. Maintaining a tax differential between fine-cut and cigarettes creates a buffer between legal and illegal trade.

ESTA Secretary General Peter van der Mark said: “These proposals in Spain calls to mind similar policies in other European countries that have failed. Aggressive taxation on fine-cut tobacco products only increases the profits of smugglers and reduces State revenues. Spain must not give in to calls for aggressive tax increases but listen to experienced policymakers who know that raising taxes on tobacco products without maintaining the buffer of fine-cut results in more money flowing into the hands of criminals in the black market”.

Learn more about ESTA’s position on taxation.

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