Brussels proposes tobacco tax increase that would see prices rise by up to two euros per packet

The European Commission has proposed a rise in the minimum tax on tobacco that would increase the price per pack by up to two euros.The measure aims both to narrow cost differences between EU member states and boost tax revenues, 15% of which will go towards the EU budget.

The minimum tax at the moment is 90 euros per 1,000 cigarettes and 60% of the weighted average retail selling price, although, in practice, the rate applied in several member states is almost double that.

With the new revision, the Commission wants to raise it to 215 euros per 1,000 units and 63% of the weighted average retail selling price.

According to Commission data, six countries already tax cigarettes higher than the proposed reform. For this reason, they would already be complying with it, while the remaining 21 would have to increase the current tax to meet the new requirements.

In Spain, the current minimum is 150 euros per 1,000 cigarettes, plus a proportional rate of 48.5 % and a specific rate of 33.50 euros per 1,000 units.

While Brussels acknowledges that the effect on cigarette prices is difficult to predict, as it depends on individual government policies, brand strategies and general market circumstances, it estimates that it would result in a price increase of between one and two euros per pack.

Total revenue from tobacco taxation amounts to 80 billion euros, of which cigarettes account for 87% of the total, but the review seeks to also tax new products that it believes pose a growing threat to health.

The Commission proposes to extend the scope of the tobacco taxation directive to new products that currently account for 13% of the market of tobacco products sold in the EU, such as e-cigarettes, vapes or nicotine pouches, which will also be subject to new minimum taxes. Meanwhile, Swedish 'snus' will remain exempt, as provided for in Sweden's EU accession treaty.

E-cigarette liquid (up to 15mg nicotine per millilitre) will be subject to a minimum rate of 20% of the retail price or at least 0.12 euros per millilitre, while refills above 15mg will be subject to 40% of the retail price or at least 0.36 euros per millilitre.

Nicotine pouches will be taxed at 50% of the retail price, set at 143 euros per kilogram, while other products such as gums or inhalers will face a 50% tax on the retail price including taxes.

In addition, the Commission wants 15% of the EU minimum rate applicable to each product to go to the EU budget, which could generate up to 11.2 billion euros in revenue per year, although many delegations have already rejected establishing new sources of revenue for the 2028-2034 period.