Government plans to slap a stiff new tax on rolling tobacco will almost certainly backfire and lead to contraband and people buying elsewhere. Who says this is the European Association of Producers (ESTA), which predicts Portugal could lose as much as €73.9 million worth of the income they would otherwise receive.
The association accuses the government of trying to raise the price of rolling tobacco – traditionally the cheap way to smoke – from €90 to €120 a kilo. The increase “could mean a drop in 62% of tobacco tax receipts, as compared to 2013, and an increase in contraband”, it adds.
Talking to Expresso newspaper, António Abrunho, head of ITGA (the association of tobacco producers), said the consumption of rolling tobacco in Europe over the last five years has skyrocketed.
In neighbouring Spain, tobacco will cost €32 a kilo less than in Portugal, if the government’s plan to increase the tobacco tax comes into force in the 2014 State Budget.
The marked difference will mean many Portuguese smokers will “take trips” to Spain to buy tobacco for themselves and others, claimed Abrunho, adding that “15% of tobacco consumed in Europe is contraband”. The increase in prices “won’t mean people smoke less, it will just mean that member states earn less”.
