The European Parliament’s Committee on Economic and Monetary Affairs (ECON) has adopted key recommendations to revise the EU’s tobacco and nicotine taxation framework. This legislative pushback occurs amid rapid market diversification, directly leading to lower proposed excise duties and significantly extended transition periods compared to the European Commission’s initial plans.
The two legislative texts, which cover the general excise duty framework and the specific structures and rates applied to tobacco and related products, were approved with 32 votes in favor, 21 against, and 2 abstentions. The vote marks a crucial step in updating the EU’s outdated 2011 tax framework, which has struggled to keep pace with the rise of alternative nicotine delivery systems.
A More Moderate Approach to Traditional Cigarettes
While the European Commission sought a sharp increase in traditional cigarette taxation, ECON lawmakers opted for a more tempered approach. The Commission had proposed raising the minimum excise duty from the current 60% to 63% of a pack’s retail price. ECON recommended maintaining the current 60% threshold.
Additionally, while the Commission proposed a minimum excise duty of €215 per 1,000 cigarettes, the ECON committee lowered this target to €200 (a significant rise from the current €94 minimum). If approved, these new rates for traditional cigarettes are scheduled to take effect on January 1, 2028.
Phasing In Taxes on Alternative Nicotine Products
The rapid evolution of the nicotine market has left a regulatory vacuum. Products like e-liquids, heated tobacco, and nicotine pouches were virtually non-existent when the 2011 directive was drafted. This lack of harmonization led individual EU member states to establish fragmented national tax regimes, resulting in significant price disparities and cross-border smuggling.
To address this, the ECON committee supports integrating alternative products into the common excise framework but insists on lower tax rates and longer implementation windows than those proposed by the Commission. Under the committee’s recommendations, the transition periods for several categories would be extended to 2033 or 2034, allowing national markets and consumers more time to adjust.
| Product Category | Current EU Status | European Commission Proposal (by 2032) | ECON Committee Recommendation |
|---|---|---|---|
| Traditional Cigarettes | 60% / Min. €94 per 1,000 pcs | 63% / Min. €215 per 1,000 pcs | 60% / Min. €200 per 1,000 pcs (by 2028) |
| E-cigarette Liquids | No harmonized tax | 20% (low nic) / 40% (high nic) or up to €0.36/ml | 30% or €0.30/ml (by 2033) |
| Heated Tobacco | No harmonized tax | 55% or €108 per 1,000 pcs / €155/kg | 35% or €80 per 1,000 pcs / €200/kg (by 2034) |
| Nicotine Pouches | No harmonized tax | 50% or €143/kg | 28% or €50/kg (by 2033) |
| Fine-Cut Tobacco (Roll-Your-Own) | 40% / Min. €40/kg | 62% / Min. €215/kg | 55% / Min. €143/kg (by 2034) |
| Hookah Tobacco | No harmonized tax | 50% / Min. €107/kg | 40% / Min. €80/kg (by 2034) |
Delaying the Inflation Indexing Mechanism
Due to high inflation eroding the real-world impact of excise taxes in recent years, the review introduces an automatic inflation-indexing mechanism. While ECON lawmakers support this tool, they proposed a major adjustment: excluding volatile energy and unprocessed food prices from the inflation calculation.
Furthermore, the committee recommended delaying the implementation of this indexing mechanism to 2036, instead of the Commission’s proposed 2028 start date. To prevent sudden price shocks, lawmakers also advised that any automatic upward adjustment to the minimum tax rate should be capped at a maximum of 9% per year.
Balancing Public Health and Market Realities
The overarching political goal of the EU tax revision is to reduce smoking rates and prevent youth vaping, aligning with the EU’s broader “Tobacco-Free Generation” initiative by 2040. However, the file highlights the ongoing tension between public health objectives, national tax revenues, and the risk of fueling black market trade.
Rapporteur Tomáš Kubín (Patriots for Europe) emphasized that a risk-proportionate, gradual approach is essential for the directive’s practical success.
“My goal was to support a modern and more coherent framework, while ensuring that the rules remain realistic, proportionate, and enforceable,” Kubín stated. “It is not about weakening the Commission’s objectives. It is about making the directive workable in practice—protecting public health, guaranteeing national revenues, reducing incentives for fraud, and ensuring that EU rules are based on proportionality and evidence, rather than a one-size-fits-all approach.”
Next Steps in the Legislative Process
The next milestone for the proposal is a plenary vote in the European Parliament, scheduled for June 17. Following the Parliament’s vote, the European Council must reach a unanimous agreement to formally adopt the updated rules.
Once officially published, the legislation will enter into force 20 days later. Member states will then have until December 31, 2027, to transpose the majority of the new provisions into their respective national laws.
