THE SPANISH TOBACCO TAX LOOPHOLES AND THEIR CONSEQUENCES
Ángel López-Nicolás, Technical University of Cartagena
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 presentation 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. 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.
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.
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.Slides
THE PPACTE SURVEY ON THE ECONOMIC ASPECTS OF SMOKING IN EUROPE
Silvano Gallus, “Mario Negri” Institute for Pharmacological Research
Inadequate data are available on within-country comparison in Europe on economic aspects of smoking, including the extent of tobacco tax evasion. A face-to-face survey on smoking was conducted in 2010 within the Pricing Policies and Control of Tobacco in Europe (PPACTE) project in 18 European countries (Albania, Austria, Bulgaria, Croatia, Czech Republic, England, Finland, France, Greece, Hungary, Ireland, Italy, Latvia, Poland, Portugal, Romania, Spain, Sweden). In each country, around 1000 subjects representative of the population aged ≥15 years were enrolled, obtaining a total sample of 18,056 participants.
Overall, 27.2% of survey participants described themselves as current smokers (30.6% of men and 24.1% of women). The overall proportion of smokers evading taxes was 7.5%. The highest prevalence of tax evasion was observed in Latvia (38.8%), followed by Bulgaria (24.1%) and Sweden (19.4%), and the lowest one in France (2.6%), Greece (2.1%) and Portugal (0.0%). An higher frequency of tax evaders was found among less educated smokers (odds ratio, OR=1.96) and in countries with a land or sea border with Ukraine, Russia, Moldova or Belarus (OR=3.22). Around 80% of non smokers and 50% of current smokers were favourable to an increase in cigarettes price by 5%. The corresponding estimates for an increase by 20% were 70% and 40%, respectively. Assuming a 20% increase in price, 14% of current smokers would quit and 31% would reduce consumption and 22% would switch to cheaper tobacco products.
Substantial differences in terms of tax evasion were found across European countries, with an higher prevalence of evaders in eastern European countries. The study confirms that the supply of illicit tobacco is the key factor contributing to tax evasion. Data on attitudes and behaviours show that an increase in cigarette price/taxation would likely be feasible and effective to reduce smoking prevalence and consumption.Slides
ENSP ACTIONS AND SUPPORT FOR A SMOKING FREE EUROPE
Cornel Radu-Loghin, European Network for Smoking and Tobacco Control
European Network for Smoking and Tobacco Prevention (ENSP) is an independent, international not-for-profit organization, which aims to put an end to tobacco consumption and to develop a common strategy, amongst organizations active in smoking prevention and tobacco control in Europe, by sharing information and experience and through coordinated activities and projects. The two top priority objectives are: (i) to have the WHO Framework Convention on Tobacco Control (FCTC) implemented in Europe by 2020; and (ii) to reduce the prevalence of tobacco use in Europe to less than 5% by 2040.
Active since 1997, ENSP comprises several hundred member associations organised in national coalitions in European countries and specialised networks (anti-tobacco, cancer, heart, asthma associations, university hospitals, governmental agencies, consumers’ and non-smokers’ associations active in tobacco control and others) working together to pool their efforts in the field of tobacco control throughout the European continent.
At its conference, which took place in Athens in 2009, ENSP confirmed once again, based on evidence from several eminent tobacco control experts, that smoking bans which are less than total and which incorporate numerous exceptions fail to protect the health of citizens or change smoking behaviour. It also heard scientific proof that total smoke-free laws improve health by preventing heart attacks, improving respiratory health and preventing cancer. It confirmed that ventilation cannot be an effective solution. The health benefits, environmental protection and provision of clean air provide safety and health at work and help to reduce inequalities in society. Among various actions we mentioning here the support letter (2009) for Spain to speed-up the legislative process for 100% smoke-free legislation. Change of the Spanish law had a profoundly positive impact at the European and international level by reversing the unintended deleterious side-effects of the former “Spanish model”. ENSP therefore calls on all European countries to give priority to tobacco control and fulfil their obligations to honour the WHO FCTC and EU recommendations by introducing fully comprehensive smoke-free laws.