A sharp increase of the tobacco tax in Portugal can lead to the growth of illegal consumption

Written By Manuel Poças

A study suggests that a sharp increase of the tobacco tax in Portugal can lead to the growth of illegal consumption.

A recent European study drew attention to the fact that imposing a very high tax on the consumption of tobacco can lead to an increase in the illicit consumption of the product.

The study, which was performed by Povaddo and requested by Philip Morris International, covered 13 European member states including Portugal.

According to the results:

78% of Portuguese people believe that the decision makers, in order to reduce the overall amount of smoking, should not only increase taxes but also engage in active dialogue with consumers.

79% of the Portuguese think that a sharp tax increase may lead to the growth of illegal consumption, as users will look for alternative supply sources, which are cheaper.

74% of Portuguese people believe that the current method (only an increase of taxes) hinders efforts to make it harder for minors to access tobacco products, as it will be easier for them to access such products through the black market. The rationale is that if the illegal market gets bigger, it will make it easier for minors to access the products.

Last but not least, 56% of the Portuguese think that increasing the tax on tobacco will lead to the growth of the black market, which will hinder efforts to reduce the amount of smoking in Portugal. In short, the increase in tax, by itself, will go against the overall objective.

Note that, in 2022, the Portuguese Tax Authority lost 32 million euros due to the illegal consumption of tobacco.

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