Spain''s Tobacco Duty Pays for Its Education, Health and Foreign Ministry

Source from:  Gibraltar Chronicle (gi)  09/17/2014

Spanish claims and their presentation of statistics to the effect that the sale of cigarettes by Gibraltar is so disproportionate that it covers the cost of the local health and education bill can now be met with an equally startling statistic obtained from EU official sources.

The sale of tobacco in Spain generates enough revenue to cover the Spanish public health and education bill and the cost of running the Spanish Foreign Ministry and its global network of embassies.

The figures relate only to state income and expenditure.

Last month, in a series of articles targeting Gibraltar, the ABC newspaper quoted a Spanish Customs and Excise source for its headline that tobacco was paying the entire Gibraltar health and education cost. The figure is not generally disputed. Health and education come to just under £138m as at the last budget.

But statistics from the European Commission show that Spain earned a total 6.351 billion euros from tax on cigarettes in 2013, reaching a total 7.108 billion that year when cigars and other tobacco products are included. According to Spanish press reports the Spanish Government's budget for health (3.85 billion euros), education (1.95 billion euros) and Ministry for Foreign Affairs (1.05 billion euros) for 2013 totalled 6.85 billion euros.

The attribution of the sum and spending by ABC is arbitrary but it highlights the mythology and distortion that surrounds the production of statistics in relation to the Rock by Spain.

But part of Spain's growing problem is that success in anti-smoking laws and health drive has seen a dramatic decline in smoking. According to a report in El Pais last month sales have dropped by almost half in a decade.

Last year the UK's Public Accounts Committee (PAC) said the UK economy lost £1.9bn a year through tobacco smuggling, equal to 20% of all tax collected on cigarettes.

Smuggling is common from France into UK for a reason. According to June 2014 figures from the Tobacco Manufacturers' Association in UK the average price to a consumer for a pack of 20 premium brand cigarettes in UK is £8.47 compared with £5.74 in France, a differential of £2.73 a pack from over the counter sales.

And whilst the difference between France and Spain, which is cheaper, is £1.85, the price difference between Gibraltar (£2.50) and Spain (£3.89) is now £1.39.

Places in Europe selling cigarettes cheaper than Gibraltar include most of Eastern Europe and Turkey.

British American Tobacco (BAT) commissioned an economic impact study in 2013 which looked at Spain. It found that in Spain, an assessment into the economic impact of the tobacco sector on the Spanish economy was conducted by AFI, an international consultancy, and commissioned by the Spanish Tobacco Round Table – of which BAT Spain is a member. It found that the tobacco sector in Spain includes a wide range of activities, ranging from cultivation to manufacturing to retail and is important for the economy in generating employment and tax revenue.

"This includes more than €2,700 million (£2,188 million) in gross value added (GVA), over 56,000 full-time equivalent jobs and over €9,800 million (£7,942 million) in annual taxes. The economic importance of tobacco is particularly the case for some areas of the country, such as the Canary Islands, where tobacco contributes €193 million (£156 million) in GVA and generates 4,568 jobs," it said. Enditem