EU Tobacco Tax Hike Could Raise Cigarette Prices 20%

EU Tobacco Tax Cigarette Prices

The European Union is once again pushing to increase and harmonize tobacco taxes across the bloc, with a revised Tobacco Excise Duty Directive (TED) that could see cigarette prices rise by an average of 18.6% in many member states. The proposal, which has been on the agenda for years, has gained new momentum as the EU seeks to turn additional tobacco taxes into its own revenue source to support its radically increased €2 trillion budget from 2028.

According to the EU Commission’s 2024 proposal, the minimum excise duty on cigarettes would see a 139% increase, rising from the current €90 to €215 per 1,000 units. The plan also includes a 258% tax increase on rolling tobacco to bring it on par with pre-packed cigarettes, and a staggering 1000% hike for cigars and cigarillos. For the first time, next-generation products (NGPs) like heated tobacco, nicotine pouches, and e-liquids (vapes) would also be brought under the central taxation system.

These changes would most significantly impact member states in Southern and Eastern Europe where cigarette prices are currently lower. According to calculations by Euractiv, smokers in Bulgaria could face a 60% price increase (nearly €2 extra per pack), followed by Greece (38%), Croatia (36%), Slovenia (32%), Portugal (24%), and Italy and Slovakia (23%). Countries with already high tobacco taxes, such as France, Belgium, and Ireland, would be exempt from these mandatory minimum hikes.

A coalition of 15 member states has been advocating for these tax increases for health reasons, arguing it’s the most effective way to reduce tobacco consumption. However, the proposal faces strong opposition. The tobacco industry and hesitant member states warn that such drastic tax hikes have shown little success in reducing smoking prevalence in high-tax countries and instead fuel a dangerous and unregulated black market, causing governments to lose tax revenue.

Cyril Lalo, Head of EU Engagement at Imperial Brands, told europeanconservative.com that the Commission’s approach “overlooks real-world evidence” and “underestimat[es] the primary influence of price” in driving illicit trade. While welcoming tax harmonization for NGPs, he criticized the proposal for treating them the same as traditional cigarettes, arguing it’s counterproductive to harm reduction efforts. For example, setting the minimum tax on nicotine pouches six times higher than in Sweden (where they are most popular) and taxing e-liquids based on nicotine content fails to recognize their role as less harmful alternatives for smokers. Lalo warned this would not only push the black market towards regular cigarettes but also towards unregulated NGPs.

The EU Commission hopes to generate an additional €11.2 billion in “own revenues” annually through these taxes, but critics argue this overlooks the substantial tax losses already seen in high-excise countries like France and the Netherlands due to the growth of contraband and counterfeit products.

Matthew Ma
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