Tobacco sales plunge by 35% in January in Spain after tax increases and new prohibitions on smoking in bars and restaurants

Saturday, February 05, 2011

An article here in El Economista tells of a sharp decline in tobacco sales in Spain in January. Info from the article:

Never before has a slump in sales in tobacco happened as that which happened in January, with a plunge of 35 percent. A tax increase in Spain took place in December, and the entry into force of a law that prohibits smoking in all bars and restaurants have resulted in sales of just 3.85 billion cigarettes, about 2 billion fewer than last January.

According to industry data, the largest decline was for Japan Tobacco (owner of Camel and Winston), at 43%. After that were Imperial Tobacco (36.3%), Philp Moris (29.4%), and British American Tobacco (27.2%).

This means a fall in overall revenue of 21%, to 715 million euros. At this rate it will result in a loss of 160 million euros for the country.

Although sales are falling, consumption itself is not falling at the same rate due to an increase in smuggling especially in Andalcía and the coast. There is also an increase in the numbe of people that go to Gibraltar to buy tobacco at half the price.

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As for the effects of decreased consumption on health, see this article from 2010. According to that article, out of the 100 billion euros in health expenses, 15% is from health problems related to tobacco. Heart disease is the largest at 3.6 billion euros, then chronic obstructive pulmonary disease (3 billion), cerebrovascular disorders (710 million), asthma (267 million), and lung cancer (163 million). Those are the top five, but there are a total of 29 which all together make up the total 15% (15.336 billion euros in 2009). Health costs from second-hand smoking also make up an extra 530 million euros on top of that. In total, Eurostat estimates that costs from tobacco (health and social spending) make up about 1.7% of GDP.

And finally, at the end of the article is a comparison of revenues raised from smoking vs. health and social costs: taxes raised from tobacco during 2009 reached 7.718 billion euros, meaning that for every euro raised in tobacco taxes two euros were spent on health and social costs resulting from smoking it.

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