Dutch Tobacco Tax Backfires: BBB Demands Reversal Over €550M Deficit

The Dutch Ministry of Finance has confirmed a massive €550 million shortfall in tobacco excise revenues following a steep tax hike introduced on April 1. This fiscal deficit has prompted the coalition party Farmer-Citizen Movement (BBB) to propose reversing the tax increase, arguing it has merely driven consumers across borders without demonstrably reducing smoking rates.

On April 1, excise duties on a pack of 20 cigarettes jumped from €5.85 to €7.81, pushing retail prices over €11. While intended to curb smoking, the drastic increase caused Dutch domestic sales to plummet so sharply that overall tax yield declined. Neighboring Belgium experienced a similar drop in revenue after its own tax hike, while low-tax Luxembourg saw cigarette sales jump by 6%.

Research by the National Institute for Public Health and the Environment (RIVM) indicates that while 10% of smokers quit due to the price hike, a massive portion shifted to purchasing tobacco abroad. The market share of foreign-sourced cigarettes in the Netherlands spiked from 24–28% to 35–39%.

BBB Member of Parliament Henk Vermeer warned that the policy damages border-region businesses. “You’re stealing from the treasury if you do not reverse the excise increase,” Vermeer stated, noting that cross-border shoppers also spend money on other goods, draining VAT and corporate tax revenues. Vermeer also suggested exploring a future tax on currently untaxed e-cigarettes (vapes) as an alternative.

Conversely, KWF Kankerbestrijding director Carla van Gils argued that the tax’s primary goal is public health, not treasury funding. She emphasized that making cigarettes expensive is a scientifically proven method to prevent youth smoking, and vehemently opposed making tobacco cheaper again.

• Source: Opbrengst tabaksaccijns blijft dalen, BBB wil accijnsverhoging terugdraaien