Brussels tobacco plan comes under fresh attack

The European Commission’s revision of tobacco taxation has drawn sharp criticism from member states and industry groups, who allege the moves could “devastate” rural economies, drive up illicit trade, and open the door for China to expand its control over Europe’s tobacco supply chain.

Under the July 2025 proposals, the revised directive would apply from 2028, with transitional periods of up to four years. It raises EU-wide minimum excise duty levels and, for the first time, sets harmonised rates for heated tobacco, e-liquids and nicotine pouches.

A further innovation is the inclusion of raw tobacco in the EU system. Although the minimum excise on raw tobacco is set at €0 per kilogram (to avoid double taxation), the change would bring movements of raw tobacco under the Excise Movement and Control System (EMCS), allowing customs authorities to track and monitor supplies at first processing.

Meanwhile, the proposed TEDOR mechanism would introduce a uniform 15% call rate on member states’ tobacco excise bases, creating a new EU own resource expected to raise around €11 billion annually for the EU budget.

Uneven impact across Europe

The Commission argues harmonisation will reduce tax arbitrage and strengthen controls. However, industry studies warn that sudden price shocks could encourage illicit trade.

Recent figures illustrate the challenge. In France, illicit consumption reached around 38% of the market in 2024, equivalent to 18.7 billion cigarettes, according to a KPMG report. In the Netherlands, the share of untaxed cigarettes has nearly doubled in two years, from 15% in 2021 to 25% in 2023, based on national empty-pack surveys.

Other countries have seen improvements. In Greece, the illicit share fell by more than six percentage points to 17.5% in 2024 — the steepest decline in a decade. Italy also reported modest progress. Analysts credit a combination of enforcement measures and cross-border cooperation.

Political resistance

The package has already triggered political backlash.

Sweden, which has an accession treaty carve-out for snus, strongly opposed the plan. Finance Minister Elisabeth Svantesson called the proposals “completely unacceptable,” particularly in relation to nicotine pouches — a category with strong domestic demand.

In Portugal, the government issued a statement expressing “strong concerns” about the plan, including the transfer of 15% of national tobacco excise revenues to the EU budget under TEDOR.

Farmers and producers warn of losses

Tobacco producers in southern Europe also fear economic fallout. The European Commission estimates around 26,000 specialist growers remain active across 12 Member States, though older studies put the wider number of farm jobs at around 80,000 EU-wide. Italy, Spain, Greece and Poland remain the largest producers.

China, by comparison, produces over 2 million tonnes of tobacco annually, dwarfing the EU’s 140,000 tonnes. European farmers argue that tighter controls and higher duties will further reduce competitiveness and undermine Common Agricultural Policy (CAP) support.

Italian MP Riccardo Augusto Marchetti warned that “tens of thousands of livelihoods are at stake,” urging the government to defend growers and small businesses.

The EU Commission has robustly defended the measures, including the update of the EU’s Tobacco Taxation Directive.

A spokesman told this site, “In light of evolving public health challenges and significant shifts in the market, the reform modernises the Directive in line with the EU’s health and economic priorities and strengthens the Single Market. Tobacco taxation is harmonised at EU-level but the latest update to the Directive is from 2010. Since then, market dynamics have changed significantly.”

The spokesman added, “The revised Directive shall apply from 2028. A four-year transitional period will be implemented to ease the introduction of the new excise duty rates for certain products, allowing Member States to adapt to the changes.”

Next steps

Because taxation requires Council unanimity, the reforms face a difficult political path. The Commission hopes to secure agreement in time for application from 2028, but strong opposition from some Member States could delay or dilute the package.

For now, the debate pits health policy goals against concerns over economic damage and illicit trade — a balance the EU has struggled to strike in tobacco policy for decades.

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