THE price of a packet of cigarettes will rise by an average of 0.10 euros because of the rise in tobacco tax approved yesterday in Cabinet, according to predictions from sources in the tobacco sector. Nevertheless, the same sources specified that, according to European law, the establishing of the price the consumers pay is the decision of the manufacturers who can opt to recuperate the tax increase by passing it on to the customer or to absorb it. The Government yesterday approved a decree law which will take the VAT part of the tax to 55.95 percent, a rise of one point.
This will then be levied on top of the tobacco tax which will rise to 6.20 euros for every 1'000 cigarettes.
The second vice president of the Government and the Minister of Economy and Tax, Pedro Solbes, confirmed that this decision to levy a higher tax on the cheapest tobacco was part of the Government's fight against tobacco addiction. According to a report from the World Bank quoted by the National Committee for the Prevention of Tobacco Addiction (CNPT), “it has been shown that raising the price of tobacco by means of taxation reduces tobacco consumption and also health costs”. In fact, in countries with similar income to Spain, the raising of tobacco tax by 10 percent reduces the demand for cigarettes by four percent.
Also, the study says that a rise of 10 percent in tax on cigarettes results in a saving of more than 3 percent in the use of health services.

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