The proposal aims to cut down smuggling and eventually to reduce smoking incidence through harmonisation of minimum taxation across the EU, especially in new Member States.
Commission studies show that cigarette taxation across the EU is very different: in 2006 the purchased in the UK were 6-7 times more expensive than in Latvia for example. The other reason for the proposal, the reduction of smuggling, is also based on Commission studies that show that 13% of the tobacco consumed in the EU is not purchased in the country that it is used. 8-9% of this tobacco comes from illegal trafficking while only 4-5% is from legitimate cross border trade.
The Commission’s proposal involves a gradual increase of minimum taxation levels on cigarettes and fine cut tobacco products until 2014. The Commissioner acknowledged that this will mainly cause problems for new Member States as their tax increase will generally have to be larger: "In countries like Denmark or Finland, the price increase will be around 6%, and in countries like Poland it will be 46%. There is a huge difference".
The other huge implication of the price increase will be the health impact. The proposal aims to assist Member States to achieve their health objectives by increasing price of smoking as price increases in tobacco products are, according to the World Bank, "the most effective single intervention in preventing smoking." A 10% increase in price decreases consumption by 4% on average.
The Hungarian Commissioner would like to see the proposal adopted by mid-2009 however there is likely to be heated debate as the proposal needs to be adopted unanimously.
EPHA strongly welcomes the proposal and urges Member States to adopt the proposal.
For more information
Commission website - Tobacco taxation: Commission proposes increasing excise duties
Commission website - Excise duty on tobacco products: frequently asked questions
EPHA related articles
Smokefree Partnership Workshop on Taxation and Illicit Trade of Tobacco Products
