Launch of EU’s Tobacco Tax Overhaul Marks Key Step in Wider Anti-Tobacco Effort

Following a late-May letter from 15 European finance ministries urging immediate action from Commission President Ursula von der Leyen, an internal document leaked on 12 June has confirmed the long-awaited launch of the EU's Tobacco Excise Tax Directive (TED) review. ​​As reported by Euractiv, Commission officials working closely on the file deem the bloc's tobacco taxation rules "no longer fit for purpose," with the EU executive currently considering proposals to significantly increase minimum excise tax levels. 

This major development—in line with EU Tax Commissioner Wopke Hoekstra's recent statements—shows that mounting political and civil society pressure for TED reform is paying off after years of Big Tobacco's regulatory wins. With rare momentum behind the anti-tobacco agenda, stakeholders must seize this opportunity to push for broader action, including reviewing the similarly outdated Tobacco Products Directive (TPD). Indeed, only a comprehensive overhaul of the EU's tobacco control framework will effectively counter the tobacco industry's corrosive policy influence in Brussels, thereby bolstering the bloc's public and fiscal health.

Unpacking the TED Proposals

Underscoring the urgency of the new tobacco tax rules under the Commission's consideration, a new World Health Organization (WHO) report warns that cigarettes in Europe are actually getting cheaper despite the EU's ambitious tobacco-free generation goal.' Encouragingly, the proposals in the leaked TED review impact assessment reflect a serious course correction, with the most ambitious of the three scenarios outlined calling for tax hikes of 258% on rolling tobacco and 139% on cigarettes.

 Presented as the Commission's preferred option, this bold revision would raise cigarette excise tax from €90 to €215 per 1,000 units, with rolling tobacco taxes climbing from €60 to €215 per kilogram and e-cigarettes also facing new levies. At a time when EU countries must urgently boost public coffers, the complete TED package would generate €15.1 billion in additional tax revenue. Given its adjustments for local purchasing power, the revision's impact would notably vary by country: prices would rise by €3.50 in Luxembourg, compared to €2 in Greece (+50%) and €2.60 in Bulgaria (+80%)—although this group is united by low tobacco taxes and prices.

Parallel Trade at Heart of Problem

The significant cigarette price differentials across the EU are precisely what the TED review seeks to address, with a handful of low-tax countries—chief among them Luxembourg—driving a flourishing parallel trade. New data from 2024 shows that 88% of cigarettes sold in Luxembourg were consumed abroad, with the country receiving more cigarettes yet consuming fewer compared to the previous year. Crucially, this deteriorating situation reflects the tobacco industry's deliberate oversupplying strategy to exploit low-tax entry points and facilitate the channeling of cheap products into high-tax markets like France, where smokers increasingly gravitate to these cross-border purchases.

Alongside France, the Netherlands is among the EU's highest tobacco-taxing countries and a prime target for Luxembourg's parallel trade. Since its latest tax hike, roughly 60% of Dutch smokers have bought their tobacco abroad, up from 40% in 2023. In response to this sharp rise, the Dutch public health agency recently called for new policy measures to curb cross-border purchases and prevent smokers from dodging domestic taxes—building on the Netherlands' leadership of a 15-country coalition that last year urged the Commission to address the wide intra-EU tax disparities.

Big Tobacco's Long History of Interference

Although Commissioner Hoekstra recently voiced hopes of finalising the TED reform by summer, President von der Leyen is reportedly wary, citing inflation concerns. Meanwhile, the broader opposition camp has warned of a disproportionate burden on lower-income, low-tax countries like Greece and Romania—both formally opposed to the overhaul—as well as the creation of black markets.

This opposition—which notably parrots Big Tobacco's misleading rhetoric and ignores clear World Health Organization guidance that strong excise taxation is the single-most effective tool to reduce smoking—is entirely in keeping with the von der Leyen Commission's long-standing reluctance to challenge the tobacco industry. NGOs such as the Smoke-Free Partnership and Corporate Europe Observatory have criticised the EU executive for allowing years of delays on both the TED and TPD reforms—both of which would directly threaten the industry's bottom line by implementing robust public health and transparency protections sorely lacking in the EU's current framework. 

In recent years, Big Tobacco has taken full advantage of the Commission's weak transparency standards to gain outsized sway over EU policy. In repeatedly failing to uphold its own transparency rules or meet its WHO FCTC obligations in its dealings with tobacco lobbyists—earning multiple maladministration rulings from then-European Ombudsman Emily O'Reilly—the Commission has sabotaged its own ambitions for a tobacco-free future.

Shoring Up Defenses with TPD Revision

The Commission's vulnerability to the tobacco lobby has been prominently exposed in a White Paper produced last year by a group of MEPs alongside leading civil society organizations, including the Smoke-Free Partnership and the University of Bath's Tobacco Control Research Group. Beyond Big Tobacco's manipulation of the TED review process, the White Paper's contributors spotlight the concerning delays of the TPD, whose overhaul is equally essential.

Indeed, the tobacco industry has lobbied for over a decade to shape the TPD to its corporate interests. From diluting the last TPD revision in 2014 by securing the removal of independent traceability measures designed to fight illicit trade to heavily influencing the Commission's selection of operators for the EU traceability system launched in 2019, the industry's fingerprints are everywhere. As the White Paper warns, the system now includes firms with tobacco industry ties—directly contravening WHO FCTC rules—and has consequently failed to curb the EU's record-high illicit tobacco trade.

Beyond implementing an industry-independent, WHO-compliant traceability system, the TPD revision would also allow for bold new measures to counter the industry's cross-border tactics. As the White Paper proposes, introducing a country-based quota system—equally required by the WHO FCTC—would be a vital step toward curbing the parallel trade the industry deliberately cultivates.

Brussels's Moment of Truth

After years of stagnation, the tide may finally be turning in Brussels. The launch of the TED review is a long-overdue breakthrough—made possible by the persistent pressure of member states, MEPs, and civil society coalitions that refused to let the EU's tobacco control agenda slide further into irrelevance. Nevertheless, the industry's grip remains strong, meaning the anti-tobacco movement must now double down.

Within the Commission, Commissioner Hoekstra and his EU allies must also stay the course, using this momentum to ensure that the TPD review follows swiftly behind the revamped TED. Citing the TPD revision's long delay, Irish Health Minister Jennifer Carroll MacNeill notably stated in late June that Ireland will make the file a priority during its EU Council Presidency in the second half of 2026.

 Together, the two reforms form the backbone of a robust EU tobacco control strategy—each addressing different loopholes the industry exploits to keep smoking rates and profits intact. With both public health and billions in tax revenue on the line, the message must now be clear: Big Tobacco's game is up.