EU tobacco taxation: Commission proposal deemed insufficient

An unofficial version of the revised Tobacco Taxation Directive (TTD) has been analyzed by the Smoke-Free Partnership. The partnership believes that the Commission's proposals are insufficient in light of public health concerns and would not sufficiently reduce price disparities between countries and between different tobacco products.

As part of the European Plan Against Cancer, the European Union has set the goal of a tobacco-free generation by 2040. By that date, smoking prevalence in the EU must be below 5%. With this in mind, the revision of the European directive is crucial for reducing tobacco consumption. However, while the European Commission was due to present a proposal to revise the directive in December 2022, this step has been postponed until further notice. The Smoke-Free Partnership, which brings together the main stakeholders in the fight against tobacco use in the European Union, has analyzed a draft revision of the directive, which is circulating unofficially.[1].

Price differences between different products are too high

The Smoke-Free Partnership document highlights that the Commission's proposals would lead to small price increases in European Union countries. In the six countries with the highest tax rates, this proposed revised directive would not result in any increase in cigarette taxes (France, Belgium, Denmark, the Netherlands, Ireland, and Finland). The same is true for rolling tobacco, which would not see a significant increase in any European Union country, or even no increase at all in France and Ireland. Thus, such a revised directive would not reduce the price gap between tobacco products, even though rolling tobacco costs, on average, half as much as manufactured cigarettes. A lack of harmonization between different tobacco products is problematic from a public health perspective, as it leads to consumption shifts toward the cheapest products.

Tobacco products more accessible by 2026

The Smoke-Free Partnership's note also examines the impact of this proposed revision on tobacco accessibility. In other words, it involves measuring the share of expenditure per capita to purchase a thousand cigarettes, or 50 packs. For example, in Romania in 2022, the purchase of 1,000 cigarettes corresponded in value to 2.5% of per capita expenditure. However, if this Commission proposal were accepted, by 2026, tobacco products would be more accessible in the majority of European Union countries, compared to 2022. In eight Member States (Bulgaria, Poland, Greece, Spain, Austria, Sweden, Luxembourg, and Germany), the levels of accessibility would be identical between 2022 and 2026. In no European Union country would this directive reduce the accessibility of tobacco products. However, while the EU Tobacco Products Directive imposes minimum levels of taxation across the European Union, it does not prevent member states from pursuing their own tax policies.

An increase in tax revenues expected

According to the Smoke-Free Partnership, this proposal would lead to a reduction in demand for cigarettes and rolling tobacco of around 3.3% in 2025 and 4.1% in 2028. Despite this reduction in demand, an increase in tax revenue is expected (+8.5% in 2025, +6.4% in 2028). This reduction in demand would probably be mainly driven by the countries on which the revision of the European directive would have an impact.

Smoke-Free Partnership calls on the Commission to relaunch the legislative process

Several weaknesses are highlighted in this proposal to revise the directive. First, the levels of increase are deemed insufficient. Second, the Commission is not sufficiently taking into account the price differences between different tobacco products. Finally, the proposal should take into account the inflationary context and implement sufficient increases so that the increase in tobacco product prices exceeds the general price trend. Furthermore, the Smoke-Free Partnership calls on the European Commission to restart the legislative process for revising the directive as quickly as possible.

Keywords: Smoke-Free Partnership, Commission, Tobacco Tax Directive

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[1] Smoke-Free Partnership, Tobacco taxation in the European Union, Ángel López-Nicolás, (accessed 12/18/2023)