Reevaluating tobacco taxes in Spain: Revenue maximization, equity, and public health in an aging society

Juan Manuel Martín-Álvarez; Aida Galiano; Antonio Golpe; José Carlos Vides; Juan Manuel Martín-Álvarez; Aida Galiano; Antonio Golpe; José Carlos Vides

doi:10.3934/NAR.2025019

National Accounting Review

2025, Volume 7, Issue 3: 457-475. doi: 10.3934/NAR.2025019

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Research article

Reevaluating tobacco taxes in Spain: Revenue maximization, equity, and public health in an aging society

1.
Department of Quantitative Methods for Economics and Business, Universidad Internacional de La Rioja, Logroño, Spain
2.
Department of Economics, University of Huelva & Centro de Estudios Avanzados en Física, Matemáticas y Computación, Huelva & Instituto Complutense de Estudios Internacionales, ICEI, Madrid, Spain
3.
Departament de Economía Financiera y Dirección de Operaciones, Universidad de Sevilla & Instituto Complutense de Estudios Internacionales, ICEI, Madrid, Spain

Received: 23 January 2025 Revised: 07 August 2025 Accepted: 08 September 2025 Published: 18 September 2025
JEL Codes: H25, I18, H21, D12, J14

In this study, we examined the role of tobacco taxation in Spain, focusing on its effectiveness in reducing smoking, generating fiscal revenue, and promoting health equity within the framework of health economics and national accounting. Using panel data econometrics across Spain's 48 provinces from recent decades, we evaluated the relationship between tax rates, tobacco consumption, and fiscal outcomes. Our results suggested that while tobacco taxes are effective in reducing consumption overall, their impact is limited by tax disparities between products and substitution toward roll-your-own (RYO) tobacco. Furthermore, demographic factors, including aging populations and socio-economic disparities, significantly influenced consumption patterns and tax sensitivity. Evidence indicated that Spain's current tobacco tax rates might fall below the revenue-maximizing point, leading to potential fiscal losses. Accounting for these findings, we highlighted pathways to refine the tax structure, including integrating specific and ad valorem taxes, adjusting for inflation, and harmonizing rates across tobacco products. These insights contribute to the optimization of tobacco taxation, supporting fiscal sustainability and public health outcomes.
- tobacco taxation,
- public health economics,
- fiscal policy and revenue,
- price elasticity and consumption,
- demographics and aging populations
Citation: Juan Manuel Martín-Álvarez, Aida Galiano, Antonio Golpe, José Carlos Vides. Reevaluating tobacco taxes in Spain: Revenue maximization, equity, and public health in an aging society[J]. National Accounting Review, 2025, 7(3): 457-475. doi: 10.3934/NAR.2025019

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Abstract

In this study, we examined the role of tobacco taxation in Spain, focusing on its effectiveness in reducing smoking, generating fiscal revenue, and promoting health equity within the framework of health economics and national accounting. Using panel data econometrics across Spain's 48 provinces from recent decades, we evaluated the relationship between tax rates, tobacco consumption, and fiscal outcomes. Our results suggested that while tobacco taxes are effective in reducing consumption overall, their impact is limited by tax disparities between products and substitution toward roll-your-own (RYO) tobacco. Furthermore, demographic factors, including aging populations and socio-economic disparities, significantly influenced consumption patterns and tax sensitivity. Evidence indicated that Spain's current tobacco tax rates might fall below the revenue-maximizing point, leading to potential fiscal losses. Accounting for these findings, we highlighted pathways to refine the tax structure, including integrating specific and ad valorem taxes, adjusting for inflation, and harmonizing rates across tobacco products. These insights contribute to the optimization of tobacco taxation, supporting fiscal sustainability and public health outcomes.

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