A study concludes that the European directive on tobacco taxation is realistic and necessary

A study conducted by the Vienna Institute for International Economic Studies at the request of the European Parliament's Subcommittee on Fiscal Affairs (FISC) examines, in particular, the effects on prices and public revenue of the proposed revision of the European Tobacco Products Taxation Directive (TTD). It also assesses, as a secondary measure, the potential health consequences in nine Member States representative of different regions: Bulgaria, Czechia, France, Italy, Poland, Portugal, Romania, Slovakia, and Spain.[1].

A study to simulate the tax effects of the European directive

The report begins with the observation that Europe has the highest smoking rates in the world, with approximately one in four Europeans (23.8%) consuming at least one tobacco or nicotine product by 2025. This is compounded by the rise of new nicotine products that currently escape regulations on traditional tobacco (e-cigarettes, heated tobacco, nicotine pouches, etc.). The report also reiterates that tax policies involving regular and sustained increases, as stipulated in Article 6 of the WHO Framework Convention on Tobacco Control (FCTC), have consistently been recognized by researchers as the most effective tool for reducing consumption. Finally, the authors note that significant disparities remain between countries, both in terms of taxes and retail prices.

Faced with these challenges, the proposed revision of the Tobacco Excise Directive (TTD), as published by the European Commission in July 2025, aims to increase minimum EU excise duty rates for manufactured cigarettes and rolling tobacco by extending harmonized taxation to emerging products and introducing inflation indexation. The proposal is subject to the special legislative procedure, which requires unanimous support for adoption in the Council, following consultation with the European Parliament. The current directive on the taxation of manufactured tobacco products has been in force since 2011, and its minimum excise duty rates date back to 2014. This study models the scenario in which the revised directive enters into force in 2028, with inflation-adjusted rates for the period 2025-2027, and compares the results with a baseline scenario for 2024.

The study uses the Tobacco Excise Tax Simulation Model (TETSiM) to assess the effects of aligning national excise rates with the new minimum thresholds proposed by the EU for cigarettes, rolling tobacco, heated tobacco products and electronic cigarettes.

Tax increases are possible for all member states.

The authors believe that the proposed tax increases remain feasible for all the countries studied, even though most currently apply levels lower than the minimums suggested. Retail prices would increase significantly, especially in countries where taxes are currently lowest, such as Poland and Bulgaria, where the weighted average price of cigarette packs could increase by approximately 64% and that of rolling tobacco by more than 68%.

In countries where taxation is already higher, such as France, the effects would be more moderate, and would mainly concern products that are currently taxed little or not at all, particularly e-liquids, while reducing the current gaps with other countries.

Positive effects expected on health and public finances

The study concludes that the consumption of tobacco and other nicotine products would decrease in all the countries analyzed, especially those with the highest cigarette taxes. Tobacco consumption in France would decrease by an average of 7.8% between 2024 (before reforms) and 2028 (after reforms). This decrease would primarily affect the consumption of cigarettes and e-cigarettes. Despite some potential substitutions with rolling tobacco, the overall effect would remain negative for total consumption.

The health benefits would also be significant, with a measurable decrease in smoking prevalence and many premature deaths averted. In France, approximately 200,881 premature deaths could thus be avoided between 2025 and 2028, representing a public health benefit equivalent to about 0.4 per 100,000 live births in the adult population in 2028.

In parallel, excise tax revenues would increase in all countries, particularly in those that currently tax products at low levels. In France, the increase in tax revenue would be approximately 7.8% between 2024 and 2028. This increase would be explained in France's case by a rise in taxes related to the taxation of vaping. Furthermore, price differences would be reduced with neighboring countries (such as Spain or Luxembourg), thus decreasing incentives for cross-border purchases. While the model does not explicitly quantify a "recovery" of tax revenue for France, it highlights that revenue gains would be underestimated because the model does not incorporate the potential decrease in these purchases. This implies an indirect recovery through reduced tax losses due to purchases abroad.

The report underlines that a delay in implementation would reduce both health and fiscal benefits, as inflation would decrease the real value of the new tax minimums.

He also notes that new generation products continue, in many cases, to benefit from a tax advantage compared to cigarettes, which may encourage their use by young people or non-smokers, as well as dual use rather than complete cessation.

Finally, the authors believe that the risks associated with illicit trade and cross-border purchases exist, but remain manageable. They reiterate that parallel markets depend primarily on supply and conditions within the country, even more so than on tax levels per se: the existence of well-established parallel market networks (including the oversupply of border markets by tobacco manufacturers) or disparities in control and governance capacities.

The authors call for the swift and strict application of the European directive.

According to its authors, a coordinated increase in taxes would reduce disparities between member states, limit market distortions and strengthen the overall European policy to combat smoking.

Any delayed or scaled-back implementation would weaken the expected beneficial effects.

Meanwhile, the European Commission, in its evaluation of the 2014 Tobacco Products Directive (TPD) and the Advertising Directive (TAD), recently warned of the lack of a harmonized framework for emerging products, the inadequacy of rules on flavourings and the limitations of the system in the face of industrial strategies, and revived the debate on the need for an ambitious revision of the TPD.

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[1]Fidanovski, K., Jovanovikj, B., Kungl, N., Ross, H., Kranawetter H., Excises on Tobacco products in the EU. Impact on the internal market of the minimum rates of excise duty and the wide availability of alternative tobacco products currently not covered by Council Directive 2011/64/EU on the structure and rates of excise duty applied to manufactured tobacco, Brussels: European Parliament, Policy Department for Economy and Growth, published in March 2026, accessed on April 14, 2026

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