Majority of EU member states call for updated tobacco taxation to address public health and revenue concerns

In a co-ordinated effort to modernize the Union’s approach to tobacco taxation, 16 member states are pushing for a significant overhaul of the bloc’s rules. The initiative reflects growing concerns over public health, economic disparities, and the rise of alternative tobacco and nicotine products, which current regulations struggle to address effectively, writes Colin Stevens.

The push for reform

The last EU’s tobacco taxation framework, the Tobacco Excise Directive (TED), was last revised more than a decade ago. The outdated rules have failed to keep pace with inflation, evolving consumer behaviours, and the emergence of novel products – such as e-cigarettes and heated tobacco devices. The coalition of countries that calls for an update is seeking stricter measures to combat smoking rates and generate equitable revenue.

According to the 16 countries (Croatia, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Latvia, Slovakia, Spain, Belgium, Bulgaria, Ireland, Slovenia, the Netherlands and Portugal ), the current system allows disparities in taxation rates across the Union, creating price gaps that encourage cross-border shopping and undermine national efforts to reduce smoking. The EU could ensure a fairer system and bolster public health initiatives by harmonizing tax rates and modernizing the framework.

Public health at the forefront

Responsible for hundreds of thousands of fatalities annually, smoking remains one of the leading causes of preventable deaths in the EU. The European Commission has set ambitious targets to reduce tobacco use, aiming for a “tobacco-free generation” by 2040, where less than 5% of the population smokes.  Updating taxation policies is seen as a cornerstone of achieving this goal.

Evidence consistently shows that higher tobacco taxes lead to reduced smoking rates, particularly among young people, who are more sensitive to price changes. On the other hand, high taxes on cigarettes are a magnet to organized criminals who are moving operations closer to major markets such as France – which now accounts for nearly half of all illicit cigarettes consumed in Europe. However, the rise of alternative products complicates the landscape. These new products,  are less harmful alternatives to traditional cigarettes and are subject to inconsistent taxation and regulation across the EU.

Economic and political implications

For many EU countries, the revenue generated from tobacco taxes is a significant source of income, funding healthcare and other public services. The proposed reforms aim to strike a balance between maximizing revenue and discouraging consumption. Countries with lower tobacco taxes, however, may resist significant changes, fearing economic disruption and loss of competitiveness.

The debate also underscores broader tensions within the EU over the balance of national sovereignty and collective decision-making. While some member states emphasize the need to retain control over taxation policies tailored to their unique economic and social contexts, other advocate for greater harmonization to ensure a level playing field.

Addressing new challenges

One of the most pressing challenges is incorporating alternative tobacco and nicotine products into the taxation framework. E-cigarettes and heated tobacco products have gained popularity in recent years. There are some concerns about their accessibility and potential to perpetuate nicotine addiction because these products are often taxed at lower rates.

The 16 countries calling for reform argue that these products should be taxed proportionally to their health risks, based on scientific evidence. A consistent EU-wide approach would prevent regulatory gaps and provide clearer guidance for consumers.

The path forward

The European Commission is expected to consider the proposals and launch consultations on the potential reforms. However, achieving consensus among all 27 member states will likely be a complex and contentious process. Stakeholders, including public health advocates, industry representatives, and policymakers, will need to navigate competing priorities to develop a framework that serves the bloc’s collective interests.

Updating the EU’s tobacco taxation rules represents an opportunity to address long-standing inequities, improve public health outcomes, and adapt to a rapidly changing market. As the debate unfolds, it will serve as a litmus test for the EU’s ability to unite around shared goals while respecting national differences. Nevertheless, Poland, which has recently taken on the EU’s rotating presidency, says it is willing to work on the new bill if the European Commission proposes it before the end of June.

Innovation and collaboration are key

Earlier this month, global leaders at the World Economic Forum in Davos urgently called for Europe to reevaluate its economic and regulatory strategies, particularly with Donald Trump back in power in the United States. During a roundtable discussion, they emphasized the need for Europe to enhance its competitiveness, innovation, and unity. They said collaboration is paramount to addressing economic, technological, and geopolitical challenges.

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