Online Stakeholder event on tobacco taxation

Directorate-General for Taxation and Customs Union

18 May 2022

The Online Stakeholder event on tobacco taxation, organised by the Directorate-General for Taxation and Customs Union, on May 18th, 2022, focused on the finalization of the new directive on taxation concerning the traditional and novel tobacco/nicotine products.

This directive aims at enforcing the EU rules on minimum tax rates, as a prior evaluation of the current directive had showed that a. the impact on public health had been moderate, b. the low degree of coherence between the directive and other EU policies, and c. the need to develop synergies.

Smokers in the EU remain a matter of great concern, as 26% of the overall EU adult population and 29% of young Europeans aged 15-24 are still smoking. The launch of the Europe’s Beating Cancer Plan highlights the pivotal role of taxation in reducing tobacco consumption and deterring young people from smoking. Moreover, the price gaps between EU member-states, as the average price of cigarettes packet can range between €2.57 and €11.37, represent a sufficient economic incentive for unintended elevated levels of cross-border shopping.

The new directive will initiate a more comprehensive and holistic approach, by taking on board all aspects of tobacco control, including public health, taxation, the fight against illicit trade and environmental concerns.

The event’s organizing committee asked for input on three topics: i) common level of minimum tax rates, ii) differential taxation of products, and iii) illicit trade. The participants, approximately fifty (50), were representing health organizations, trade organizations, activist groups, and industry. After this event, the directive will be submitted to the EU Parliament and the EU Council by the end of this year.

Following the introductory remarks by the organizers, the participants were given time to discuss. On behalf of the SCOHRE Association, Dr. Karl Erik Lund, senior researcher at the Norwegian Institute of Public Health, and Vice President of SCOHRE, the International Association on Smoking Control & Harm Reduction, presented the association and stated that SCOHRE emphasizes that e-cigarettes (ENDS) are much less harmful to health than combustible cigarettes. ENDS contribute to smoking cessation, displace cigarettes among people who would otherwise take up smoking and are economic substitutes for cigarettes.

“While supporting a high tax on cigarettes, SCOHRE is concerned that a risk-averse, precautionary approach that makes ENDS and other non-combustible nicotine products more expensive might cause harm by perpetuating smoking”, said Dr. Lund. In addition, SCOHRE argues for a risk-proportionate approach to taxation – differential taxes for differential risks. ENDS should be used to drive down smoking, the dominant form of tobacco use in the world. Dr. Lund finished his comment by saying that “once the problem of smoking has been substantially addressed, ENDS tax policy could be revisited”.

As for the other participants inputs, they were mostly in favour of the tax differences between products.

Further reading/selected papers:

• Frank J. Chaloupka, David Sweanor and Kenneth E. Warner. Differential Taxes for Differential Risks — Toward Reduced Harm from Nicotine-Yielding Products. N Engl J Med 2015; 373:594-597. https://www.nejm.org/doi/full/10.1056/NEJMp1505710
• David J. K. Balfour, Neal L. Benowitz, Suzanne M. Colby, Dorothy K. Hatsukami, Harry A. Lando, Scott J. Leischow, Caryn Lerman, Robin J. Mermelstein, Raymond Niaura, Kenneth A. Perkins, Ovide F. Pomerleau, Nancy A. Rigotti, Gary E. Swan, Kenneth E. Warner, and Robert West. Balancing Consideration of the Risks and Benefits of E-Cigarettes. American Journal of Public Health 2021: 111, 1661_1672, https://doi.org/10.2105/AJPH.2021.306416