Spain loses €1 billion annually due to low excise duties on alcohol

by Lorraine Williamson
alcohol excise duties - image courtesy of Jade Taylor

MADRID – Spain could collect €1 billion extra per year if the Spanish government were to tax alcohol at the same percentage as the average in Europe. The gap between the excise duties that Spain and the rest of Europe levy on alcohol is quite large. 

The Spanish news site Cincodías.elpaís.com shows in an overview how much tax European countries levy on alcohol. Of all European countries together, an average of €5.13 in tax is paid for a 700 ml bottle of alcohol. This is based on alcohol with a 40% content. For a beer (330 ml) that is €0.14 and for a bottle of wine, it is €1.29. 

Spain levies considerably less excise tax on alcohol 

Spain is one of the countries where people have to pay considerably less tax for consuming alcohol. The average for 700 ml of alcohol (40%) amounts to €2.69 in tax and for a beer (330 ml) it is €0.03. Compared to the European average, Spain, therefore, levies around 48% less excise duty on spirits. And on beer, the excise duty is 79% less. 

Spain loses €1 billion annually 

The Spanish Ministry of Finance has asked a group of experts to analyse this topic. According to this team of experts, the collection of excise duties on alcohol in Spain accounted for 0.29% of the total tax revenue of 2019 (the year before the pandemic). This amounts to approximately €618 million. 

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If Spain kept about the same percentage as the average in Europe (0.79%), this amount would rise to about €1.682 billion. The conclusion drawn from this is that Spain misses out on around €1 billion in tax every year. 

Experts advise Spain to increase excise duties 

Tax experts are calling for a change in the excise tax on alcohol, not only to increase revenue for the treasury but also to reduce alcohol consumption. According to them, that is precisely the reason that excise duties are levied on ‘products that have adverse effects on public health’. Moreover, Spain would not adjust the excise tax to inflation, which only widens the gap with the average European percentage. For all these reasons, the team of experts advises the Ministry of Finance to review the tax rates for alcoholic beverages. 

In the same vein, the team of experts also looked at taxes on tobacco and sugary drinks. For both products, the experts also come up with recommendations to reduce the consumption of these products through tax increases. 

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