The European Commission has reiterated the need to tackle tobacco smoking by raising taxes, which is expected to increase the price of cigarettes and other tobacco products in the EU. It presented a draft revision of the Tobacco Taxation Directive and a new measure known as the Tobacco Excise Duty Own Resource (TEDOR).
Under TEDOR, a flat rate of 15% will be applied to the quantity of tobacco and related products produced and released for consumption, based on the minimum excise duty rate in force in each country. The European Commission expects TEDOR to generate approximately €11.2 billion per year.
The revision of the Tobacco Taxation Directive aims to increase the minimum rates of excise duty, a tax levied on specific goods at the point of production or importation.
Under the new rules, the scope of the directive will be expanded to include e-cigarette liquids, chewing and nasal tobacco, nicotine pouches, other nicotine products and raw tobacco.
These two proposals mark the first significant changes to EU tobacco tax legislation in recent years. A broader update of EU tobacco rules, which was expected during the previous term of European Commission President Ursula von der Leyen, was delayed and is currently on hold.
However, the continued delays have raised questions about the influence of the tobacco industry on policymaking. The revised Tobacco Excise Duty Directive will adjust the minimum excise taxes on traditional tobacco products, which have currently been in place since 2010.
Under EU law, Member States must set a minimum excise duty rate on cigarettes, although they are allowed to exceed it based on national priorities.
Under the new revised rules, the Commission wants to set the excise duty on cigarettes at no less than 7.5% and no more than 76.5% of the total tax burden.
The revision also aims to tighten controls on raw tobacco, which often finds its way into illicit markets.
