Experts warn new tax plan could push smokers toward illicit tobacco instead of safer alternatives
Economists warned EU lawmakers today that taxing vaping products and other smoke-free alternatives at the same rate as cigarettes could discourage smokers from switching to less harmful options – and drive some to the black market.
At a hearing of the European Parliament’s Subcommittee on Tax Affairs (FISC), Professor Francesco Moscone said the European Commission’s new Tobacco Taxation Directive (TTD) risks blurring the difference between high-risk and lower-risk nicotine products.
He told MEPs that the plan “does not align with scientific evidence” and said: “Equal taxation for unequal risks removes price incentives for smokers to shift to less harmful alternatives. A sharp increase in prices will push consumers toward illicit products rather than cessation.”
Commission insists the plan is about the single market – not health
The European Commission says it wants to update outdated rules and stop big differences in nicotine taxes between EU countries. The proposal would set minimum taxes for e-liquids, nicotine pouches and heated tobacco for the first time.
Ms Maria Elena Scoppio, a senior Commission tax official, said the aim is to avoid cross-border shopping and market distortions, not to create a health-based tax system.
She told the committee: “The objective.. is not related to health, but with the internal market.. Member States do not know how to treat the substitutes of the traditional tobacco products in a way that prevents distortions.”
On concerns about Brussels overreach, she added: “This proposal is subject to unanimity.. and does not have a real impact on fiscal sovereignty.”
Economist: higher vape taxes could backfire
Professor Moscone said scientific agencies consider non-combustible nicotine products to be less harmful than smoking. He said: “Heated tobacco, nicotine pouches, and e-cigarettes are identified as less harmful.”
He warned that new nicotine products are especially price-sensitive, meaning tax hikes could push consumers in the wrong direction. He said: “Research.. suggests new nicotine products are more price sensitive.. a sharp increase in prices will push consumers toward illicit products rather than cessation.”
He also pointed to the Commission’s own estimates, saying: “The proposed excise adjustment could raise EU-wide inflation by around 0.55 per cent.. This is not a trivial matter.”
Industry warns of impact on lower-income countries
Representing Tobacco Europe, Christa Pelsers said the proposed increase in the minimum cigarette tax – from €90 to €215 per 1,000 cigarettes – would hit certain countries hardest.
“Consumers in low-income Member States.. would be hardest hit,” she said. She argued the plan does not reflect differences in risk between products, saying: “The excise differentials do not reflect the risk-differentiated profiles.. Equal taxation for unequal risks distorts competition.”
Pelsers also warned about illegal tobacco, saying: “It’s a myth that price increases would not affect demand.. the more incentive the consumer has to switch.. that includes lower-priced illicit cigarettes.”
Public-health experts challenge industry arguments
Dr Hanna Ross, an economist specialising in tobacco control, told MEPs that cigarettes remain too affordable in many EU countries and that a higher minimum tax is justified.
She said: “Affordability.. is declining in Romania, Poland, Czech Republic.. we do need to decrease the affordability of cigarettes.”
She said claims about tax-driven illicit trade were exaggerated, adding: “The relationship between taxation and illicit trade is weak, if non-existent.” Ross also warned that low taxes on newer nicotine products hand manufacturers unusually high profits. She said: “If the government doesn’t take their fair share.. the industry will take it.. profit margins on these novel products are enormous.”
Advocates say low taxes fuel youth uptake
The Smokefree Partnership’s Gies van Wyk called for stronger taxes on all nicotine products, warning that many are designed to appeal to teenagers.
He said: “These products are addictive, heavily marketed, and designed to appeal to young people.. Without consistent and robust taxation, they remain an open gateway to addiction.”
MEPs: national sovereignty vs. risk-based taxes
MEPs were split on the issue. Some argued EU countries must keep control over their own tax policies, while others asked why lower-risk products were not being taxed less.
Luxembourg MEP Fernand Kartheiser said: “Taxation is a national competence.. what we are really discussing here is an overreach of Commission competence.”
Italian MEP Marco Falcone pressed the Commission on risk differences. He said (translated from Italian): “Would it not be preferable to increase the tax differential between lower-risk products and traditional smoked products?”
What this means for consumers
The core question for millions of smokers and vapers is whether the EU will:
- set lower taxes for lower-risk products, creating incentives to switch, or
- apply similar taxes across the board, which economists warn could remove those incentives entirely.
The European Parliament will give its opinion soon, but the final decision rests with Member States – and all 27 must agree.
