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A majority of EU member states have called for the European Commission to press ahead with a long-delayed plan to tax vapes and raise minimum excise rates on cigarettes and cigars.
In a letter to commission president Ursula von der Leyen, seen by the Financial Times, 15 countries including Germany, France, Spain and the Czech Republic requested she “take without delay the necessary steps in order to update the [tobacco taxation directive]”, which was last revised in 2011.
They want her to unblock the proposal, which is yet to be adopted by the commission and would, for the first time, set minimum taxation rates for vapes, nicotine pouches and heated tobacco. It would also substantially raise minimum excise rates for cigarettes and cigars to harmonise taxation across the bloc and reduce tobacco fraud, EU officials said.
“The current scope and provisions of the directive are insufficient to enable member states to deal with the significant challenges posed by ongoing developments and trends in the European tobacco market, including the emergence of novel products,” the 15 EU finance and economy ministers wrote in the letter.
Tax commissioner Wopke Hoekstra will push ahead given the important health concerns and lost revenue from illegal trade, estimated by Olaf, the European Anti-Fraud Office, to be more than €10bn a year.
“The rules for tobacco taxation are no longer fit for purpose. We are considering working on a proposal to amend them,” the commission said.
Initially scheduled for 2022, the commission delayed the bill because of concerns about the impact that rising excise taxes could have at a time when inflation hit double digits across the bloc. Annual inflation has since slowed, falling to 2.2 per cent in April.
EU officials said a proposal was expected “soon”. Still, the bill requires unanimous approval. Italy, Greece and Romania are among a minority of EU states lobbying against it. In a letter shared with Hoekstra last month, seen by the Financial Times, they said they did not deem it necessary ‘‘to proceed . . . to a comprehensive revision of the overall EU legislation”.
They said smoking rates are already falling. But they are also big tobacco producers.
Under a leaked version of the 2022 proposal, which was never adopted, seen by the Financial Times, minimum excise rates for cigarettes would have increased by 100 per cent, 200 per cent for rolling tobacco and 900 per cent for cigars and cigarillos. Minimum rates could change in the final proposal.
As the EU’s bill sets minimum excise rates, it would not have an impact on countries which already set tobacco taxation above those it will propose at EU level.
Cigar makers criticised the move. Paul Varakas, director of the European Cigar Manufacturers Association, said it was ‘‘out of touch and completely irresponsible in the context of an uncertain trade war’’.
