title: The Spanish tobacco tax loopholes and their consequences.
abstract: OBJECTIVE
  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 downtrade. This paper 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.
  
  
  METHODS
  The authors 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.
  
  
  RESULTS
  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 downtrading vehicles.
  
  
  CONCLUSIONS
  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.
authors.affiliation: Departamento de Economía, Universidad Politécnica de Cartagena, Calle Real, 3, 30201 Cartagena, Spain. angel.lopez@upct.es
authors.forename: Ángel
authors.initials: Á
authors.lastname: López-Nicolás
authors.forename: María Belén
authors.initials: MB
authors.lastname: Cobacho
authors.forename: Esteve
authors.initials: E
authors.lastname: Fernández
mesh_terms: D003132:Commerce / Q000191:economics / Q000706:statistics & numerical data / Q000639:trends; D003365:Costs and Cost Analysis / Q000706:statistics & numerical data / Q000639:trends; D006801:Humans; D012907:Smoking / Q000191:economics; D000074606:Smoking Prevention; D013030:Spain; D013660:Taxes / Q000706:statistics & numerical data* / Q000639:trends; D019460:Tobacco Industry / Q000191:economics*; D062789:Tobacco Products / Q000191:economics*