Study: Spanish Cigarette Tax Did Little To Curb Smoking Due to Loophole

Spanish smokers simply switched to hand-rolled cigarettes after a minimum tax was implemented in 2006.

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Smokers in Spain avoided a cigarette tax by rolling their own.

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A sweeping cigarette tax in Spain did little to curb smoking due to a loophole many smokers abused, according to a study published Thursday in the journal Nicotine and Tobacco Research.

Enacted in 2006 in the Spanish mainland, cigarette prices rose 44 percent between 2006 and 2010, but rose only 10 percent in the Canary Islands, a Spanish territory where a tax exemption kept prices down. The price increase had "no significant effects" on smoking prevalence on mainland smokers and seemed to closely mirror rates in the Canary Islands.

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The reason? Smokers simply switched to hand-rolled cigarettes, according to the study's authors. A loophole in the law kept fine cut tobacco from being subject to the new tax. In other places where cigarette taxes have been enacted, smoking prevalence has fallen. The researchers said they were surprised the tax did little to curb smoking, given the "well-established notion that smoking prevalence responds to price rises."

"The new tax regime has performed poorly in regard of the public health objective of reducing tobacco consumption," Angel López-Nicolás, one of the researchers involved in the study, said in a released statement. "It seems that a necessary condition to achieve such a reduction would be to plug the tax loophole that allows fine cut tobacco into the market at a substantive discount compared to manufactured cigarettes."

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López-Nicolás says the study shows that legislators have to be careful to craft tax laws without loopholes.

"The countries that have introduced a minimum tax on manufactured cigarettes might achieve little in terms of reductions in smoking prevalence if they allow a tax gap between fine cut tobacco and manufactured cigarettes," he said.

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