The long awaited EU Tobacco Excise Directive – which, as we revealed on Clearing the Air – will include massive increases on taxes for vapes and nicotine pouches – could be designed to directly finance the EU budget, according to leaked documents seen by Clearing the Air.
According to the note – a briefing for members of the Bundestag (the German Parliament) dated 7th July – the European Commission will present a proposal for so-called “own resources” next Wednesday (16th July 2025).
“[N]ew sources of own resources should also be developed where appropriate, for example, through levies on…tobacco”, the document reads, though it cautions that the package is “still subject to internal consultations”…
The proposal will be part of the EU’s annual budgeting framework known as the Multiannual Financial Framework (MFF), a sprawling seven-year agreement between the Commission, the Parliament and the EU’s Member States. Once it has been proposed by the Commission, Member States and the Parliament must approve it.
To prepare for the next budgeting cycle, which begins in 2028 to allow for negotiations between the institutions, the Commission is working on two packages of 17 documents in total, with some (including the tobacco plan) to be released on 16th July, and the remainder on 17th September.
The EU’s own resources are the main revenue sources for its budget. Traditionally comprised of a portion of Europe’s import duties, a VAT levy and direct contributions by Member States; in recent years, they have expanded to include levies based on other performance metrics, such as the 2021 decision to collect contributions based on the quantity of non-recycled plastic packaging waste in each Member State.
Clearing the Air understands that taxes on electronic waste are also included in the Commission’s sights this time around. IT is also considering increasing levies from the European Travel Information and Authorization System (ETIAS), which (when launched) will be paid by travellers from countries outside the EU (such as the UK) before entry.
Negotiations on the proposals are expected to be difficult: one longtime observer told Clearing the Air “this is just the beginning. Member States will freak out and wreck the proposal. Let’s see where this all ends”. But the briefing points out that Member States are reluctant to increase direct contributions, which “could pave the way for new own resources options” to bridge the funding gap.
A number of Member States, including Italy, Greece and Romania have expressed skepticism about new rules for excise on nicotine products. Others, led by Denmark and the Netherlands, have pushed the Commission hard on introducing a new proposal, and are particularly keen to see safer nicotine products placed in the crosshairs.
