Tobacco and Spirits Hit by Tax Hike

The Central Government has just approved a 10-percent increase on alcoholic spirits and an extra 15 cent on cigarettes… bless them. This is the fifth tax rise since Mariano Rajoy came to power in November 2011.

On the positive side, beer and wine are not affected, but you can be pretty sure that the measures given in your Spanish local will soon start to look as scanty as they are in British pubs.

Also slipped in with these tax increases was the announcement that the rise in taxes on the IBI (property tax), introduced in 2011, will be prolonged into 2015. This came as no surprise as the Minister for Hacienda had already announced back in April that the rise in IRPF (personal income tax) would be maintained until 2015, as well.

This prolongation announcement was a disguised tax hike that belied the Government’s assurance that there would be no more tax increases on IRPF, because by merely extending the tax increase through 2014 to 2015, they were in fact, raising the 2014 tax rate.

Whilst the Government praises these moves in favour of people’s health, it fails to acknowledge the negative effect it will have on the country’s major industry; i.e., tourism.

Finally, going back to the tax rise on tobacco, rolling tobacco – the increasingly popular cheaper option for smokers – has been especially targeted, bringing it up almost to the price of ‘tailor mades.’ Bear in mind that 80% of the price of cigarettes is raked in by the Government. Quickly disappearing, then, is the option of buying cigarettes in Spanish tobacconists as it is cheaper than airport duty frees.

All told the Government hopes to obtain a further 700m euros per year from these increases.

Editorial Comment: No doubt the extra 700m will be either syphoned off by the herd of corrupt politicians within reach of it or partly soaked up to pay finance expense accounts and totally superfluous ministries and departments.