A leaked internal report from the European Commission has raised urgent questions about the EU’s proposed overhaul of the Tobacco Excise Directive (TED). While the stated goals—reducing smoking and boosting revenue—may be well-intentioned, the Commission’s own analysis warns that sweeping tax hikes could have serious unintended consequences.
From soaring excise increases to mounting black market risks, the findings suggest a critical disconnect between public health ambition and economic and behavioral realities. For harm reduction advocates, this is a pivotal moment to refocus EU strategy on evidence, pragmatism, and proportionality.
What’s Being Proposed?
The Commission is reportedly considering excise increases of:
- 139% on cigarettes
- 258% on rolling tobacco
- 1,092% on cigars
For the first time, vaping products and heated tobacco are also slated for EU-wide taxation. On paper, the preferred scenario could generate €15.1 billion annually. But the Commission’s own analysts caution that the plan could backfire—badly.
The Core Risks
The leaked impact assessment outlines several key dangers:
- Increased illicit trade: Excessive tax hikes may push consumers to unregulated black markets, especially in countries with porous borders or significant price disparities.
- Cross-border shopping: Price gaps between Member States are already incentivizing cross-border purchases, undercutting both public health and revenue goals.
- Economic disruption: Southern and eastern Member States—including Greece, Italy, and Romania—warn of potential job losses, especially in rural tobacco-growing regions.
- Marginal health gains: In high-tax countries, further increases appear to produce only minor reductions in smoking prevalence—while increasing policy backlash and enforcement burdens.
A Missed Opportunity on Harm Reduction
What’s notably absent from the Commission’s proposal is a differentiated, risk-based approach to nicotine products. As Sweden’s experience with snus and nicotine pouches shows, moderate taxation of low-risk products—combined with clear public messaging—can dramatically reduce smoking-related deaths without sparking black market growth.
Experts like Dr. Karl Fagerström and Dr. Anders Milton highlight that:
- Sweden has the lowest lung cancer rate in the EU, largely due to its shift away from combustible tobacco.
- Products like snus and nicotine pouches are taxed less than cigarettes, reflecting their lower risk profile.
- Uniform, punitive taxes across all nicotine products ignore both science and consumer behavior—and could be counterproductive.
A Policy at Crossroads
Commissioner Wopke Hoekstra faces a daunting task: harmonize taxes across 27 Member States, incorporate novel products, curb smuggling, and maintain political consensus. Several countries—including Sweden, Hungary, and Luxembourg—are already voicing opposition, defending national autonomy and economic stability.
Even among supporters, such as France and the Netherlands, the cost of illicit trade is already staggering, with estimated annual losses of €9.4 billion and €900 million respectively. Europol warns that criminal networks are now establishing production inside the EU—underscoring the danger of pushing consumers away from regulated channels.
GINN’s Position: Realism Over Rhetoric
GINN supports fiscal policy that reflects scientific evidence, market behavior, and health equity. We urge the EU to:
- Differentiate taxation by product risk—higher for cigarettes, lower for less harmful alternatives
- Avoid uniform excise increases that penalize consumers using safer products to quit smoking
- Invest in education and cessation services, not just fiscal deterrents
- Strengthen enforcement against illicit trade, especially in border regions
- Engage stakeholders, including consumers, manufacturers, and harm reduction experts, in the legislative process
The Way Forward
The leaked report is a rare moment of institutional self-awareness—and a warning. While taxation is a valid tool in tobacco control, it is not a cure-all. If designed without nuance, these reforms risk punishing quitters, fueling black markets, and undermining public health.
A smarter, risk-proportionate approach—one that includes reduced-risk products in the solution, not the problem—will protect both health outcomes and fiscal integrity across the European Union.
