EU Plans Major Cigarette & Vape Tax Hike; Italy Protests

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EU Tobacco Tax, Cigarette Price Increase Italy

The European Union is preparing a sweeping revision of its tobacco taxation policies that could see the price of a pack of cigarettes in countries like Italy increase by as much as €3. The proposed overhaul of the Tobacco Excise Directive (TED) aims to harmonize taxes across the bloc, significantly raise minimum excise rates on traditional tobacco, and, for the first time, apply these principles to new-generation products like e-cigarettes (vapes), heated tobacco, and oral nicotine pouches.

The initiative, spearheaded by the European Commission’s Directorate-General for Taxation and Customs Union, is part of the broader “Europe’s Beating Cancer Plan,” which aims to drastically reduce smoking rates by 2040. An internal document, reportedly driven by Dutch Commissioner Wopke Hoekstra, outlines potential excise increases of up to 1,000% for some products. For traditional cigarettes, one calculation suggests the minimum excise could jump from the current €29.50 per thousand cigarettes to €215, which would translate to a steep price hike in many member states.

For Italy, where a pack of cigarettes currently costs between €5 and €6, this could push the price to over €8. The stated goals of the reform are twofold: to reduce the consumption of harmful products for public health reasons and to harmonize fiscal rules across the single market, thereby curbing “tobacco tourism” and illicit trade fueled by price disparities between member states. The Commission estimates the plan could generate an extra €15 billion in annual revenue for the EU, plus an additional €6 billion in savings from reduced healthcare costs and a crackdown on tax fraud.

However, the proposal has been met with strong opposition from Italian tobacconists and their associations. The Italian Federation of Tobacconists (Fit), representing over 80% of the country’s tobacconists, has voiced deep concern, arguing the move is disproportionate and could have devastating economic consequences. They warn that such a drastic price increase risks pushing consumers towards the unregulated black market and illegal e-commerce, which would undermine both the fiscal and public health objectives of the directive. The Federation also criticized the proposed fiscal equalization between traditional combustible products and non-combustible alternatives, which contrasts with Italy’s current approach, and the potential for the EU to directly levy a portion of national excise revenues.

The proposed directive, which follows a recently concluded public consultation, will be formally presented in the coming months and will require approval from both the Council of the European Union and the European Parliament. The debate highlights the ongoing tension between aggressive public health tax policies and the economic realities faced by consumers and retailers across the EU.

Matthew Ma
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