The European Commission has promoted its overhaul of tobacco rules for the EU.
These are contained in revision of the Tobacco Excise Directive (TED) and the new Tobacco Excise Duty on Raw Tobacco (TEDOR).
Both are measures specifically designed to improve public health and curb illicit trade.
The EU says the smoking prevalence of Europeans is not declining sufficiently fast to meet the Europe’s Beating Cancer Plan objective, ensuring that less than 5% of the population uses tobacco by 2040.
But the plan has its critics who claim it will harmonise taxes across the bloc and expand Brussels’ budgetary powers.
It is thought that TEDOR would raise about €11.2bn a year which has led some to argue that fiscal centralisation is the true priority.
The EU frames the reforms as health-driven but some have challenged this, citing, as an example, warnings about the dangers of nicotine pouches while, possibly, preparing to count them as a source of revenue.
Italian MEP Riccardo Augusto Marchetti questions this logic, warning the planned measures punish producers and risk destabilising rural economies where tobacco cultivation is a lifeline for thousands of workers.
Rather than safeguarding health, he argues, the reforms run the risk of undermining economic stability and fuel llicit markets.
There is some friction at member state level. Some governments are unwilling to give up control of excise revenues which are seen as vital to their budgets while others dispute the health argument, claiming that higher taxes often displace consumption into illicit channels rather than reducing smoking rates.
In 2024, it is reported that EU consumers purchased nearly 39 billion illicit cigarettes, thought to be the highest level since 2015, costing governments an estimated €14.9 billion in lost revenue. Some industry groups argue that tax hikes and patchy enforcement, not domestic production, are the main drivers of the problem.
The push for TED and TEDOR coincides with the EU’s search for new own resources to finance the budget and it is alleged that excise duties are, in reality, a funding stream for wider priorities, from defence to climate.
Member States are already wary of surrendering tax authority and possible legal challenges from the likes of Italy, Sweden and Romania could slow or even derail the plan.
One critic told this site, “the debate is less about smoking rates than about finances and this all risks further eroding public trust in EU policymaking. What began as a proposal to modernize excise rules has become a political standoff over sovereignty and credibility.”
However, the EU commission has robustly defended the measures, including the update of the EU’s Tobacco Taxation Directive.
It insists that the reforms are vitally needed for various reasons, including to modernize enforcement and to curb the illicit trade.
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 revised Directive shall apply from 2028.”
The spokesman added, “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.”
The main aims of the directive are to increase the minimum tax rates to reduce disparity in rates applied by Member States.The Commission has also proposed a partial “purchasing power” approach to manage price increases in Member States with lower average income.
In practice, the EU minimum rate would be adjusted according to the economic situation in each individual Member State, based on general price levels. In so doing, citizens, it is claimed by the EC, can be confident that their country’s tax rules are more effective in achieving public health objectives.
Another aim is to extend the scope of the directive to new products, for example, e-cigarettes, heated tobacco and nicotine pouches.
These products will be covered with new minimum taxes and their movements within the EU will be monitored as well to avoid fraud.
Swedish snus remains outside the scope of the Directive, as stated in Sweden’s EU Accession Treaty.
The draft directive also features better controlling measures concerning raw tobacco, which is subject to substantial fraud.
Currently, tobacco leaves can be produced and circulated without control in the EU, which, it is said, has led to the clandestine manufacturing of counterfeit cigarettes.
Under the proposal, the existing electronic system for recording and monitoring the movement of excise goods within the EU, will also apply to raw tobacco.
This will, according to the EU, help Member States better detect and fight the illicit trade in tobacco products.
