The European Commission is going through one of many fiercest rebellions of its new mandate as greater than 80 firms, commerce our bodies, farmers’ unions, producers and retailers accuse Brussels of pushing via a “catastrophically misguided” Tobacco Excise Directive (TED). The sector fears that the brand new proposal will wreck European business, turbo-charge organised crime and punish poorer residents, all whereas failing to scale back smoking.
In a strongly worded letter to President Ursula von der Leyen and Commissioner Wopke Hoekstra, obtained by EU Reporter, Europe’s tobacco/nicotine sector and stakeholders, which assist 2.1 million jobs, contribute €224 billion to GDP, and generate €112.9 billion in annual tax income, have issued a warning to the Commission. The letter claims that the EC has shifted from regulation to ideological overreach, disregarding its personal proof and the financial warnings highlighted in Mario Draghi’s competitiveness report.
The letter’s message is unmistakable: if Brussels forces via this tax plan, the outcome might be financial collapse in components of Europe, a surge in illicit crime networks, and the destruction of innovation meant to assist people who smoke stop.
The Commission Accused of “Copy-Pasting Failure”
At the centre of the backlash is the Commission’s proposal to impose a 140% improve in minimal cigarette excise, a 260% improve for fine-cut tobacco, and steep hikes on vapes, nicotine pouches and heated tobacco. the very merchandise many governments promote as safer options.
The business says Hoekstra’s taxation directorate has imported the worst-case eventualities from Europe’s most failed fashions:
France — a nationwide catastrophe now being replicated EU-wide
40% of cigarettes are illicit
€9.5bn misplaced yearly in tax income
Smoking prevalence unchanged at 27%
Netherlands — a textbook coverage collapse
45% of consumption now non-domestic
€900m in tax income misplaced
Cigarette consumption elevated after steep hikes
Yet these outcomes seem to have been handled not as warnings however because the blueprint for EU-wide harmonisation.
Organised Crime Set to Be the “Big Winner”
The numbers from a KPMG report (2024) on black market cigarettes consumption, cited within the letter are staggering: 52 billion illicit cigarettes consumed throughout Europe, costing governments €19 billion — and that doesn’t even embody counterfeit vapes and pouches.
Illegal manufacturing networks contained in the EU, mixed with flows from China and North Africa, already function with industrial effectivity. The proposed TED will increase, the sector argues, would hand them a once-in-a-generation windfall.
In impact, the Commission dangers pricing authorized merchandise out of attain, pushing tens of millions of customers into felony channels and stripping Member States of law-enforcement instruments and tax earnings. Some nationwide inside ministries, EU Reporter has realized, are getting ready inside assessments warning that the TED proposal may destabilise border enforcement operations and improve gang exercise.
Inflation, Inequality and the Political Suicide Question
The Commission’s personal Impact Assessment estimates TED would increase EU inflation by 0.5% — a politically charged determine at a time when households are nonetheless drowning beneath cost-of-living pressures.
But the political legal responsibility goes deeper:
- Low-income EU residents — the very folks von der Leyen claims to champion — will bear the brunt.
- Lower-income Member States will face disproportionate financial shocks.
- Retailers, farmers, logistics operators and producers might be hit concurrently.
“Europe is already shedding competitiveness,” the letter argues. “This coverage accelerates the decline.”
At a second when populist events are gaining floor throughout Europe, the Commission seems able to undertake a tax bundle that critics say may detonate voter anger in a number of Member States.
According to a former diplomat, “the EC ought to think about the sensibilities of EU international locations from South and Eastern Europe and in addition take a superb take a look at the Stockholm paradigm. In Sweden, lower than 5% of the inhabitants are people who smoke. This is the results of their pioneering coverage strategy to safer options to cigarettes. The nation has a realistic deal with hurt discount moderately than prohibition. Actually, it doesn’t make any sense to suggest a brand new EU tax directive that’s politically unacceptable to a big a part of the European capitals. It is clear that the proposal would kind a serious impediment in additional financial progress. In addition, it can decelerate analysis and innovation, with no significant well being beneficial properties.”
Science Ignored, Harm Reduction Undermined
The harshest criticism issues the Commission’s refusal to distinguish between high-risk cigarettes and scientifically lower-risk merchandise similar to vapes and heated tobacco.
By taxing all merchandise at near-identical ranges, the proposal would:
- remove incentives for people who smoke to modify,
- make safer options unaffordable for lower-income populations,
- push customers in direction of illicit and unregulated merchandise,
- destroy the EU’s personal ambition to scale back smoking to under 5% by 2040.
In quick, Brussels is being accused of sacrificing science for political optics.
Member States Prepare for Open Revolt
Countries together with Greece, Portugal, Poland, Slovenia, Romania and the Baltic States are warning that Brussels’ minimal charges would strip them of tax sovereignty, forcing via worth will increase that battle with nationwide well being methods and financial realities.
With unanimity required in Council, the TED proposal is on monitor to turn into some of the divisive political battles of von der Leyen’s second time period.
A Broad Coalition, an Unusual Tone and a Clear Political Message
The signatories vary from multinationals to farmers’ cooperatives, from packaging and paper producers to corner-shop associations. The breadth — and sharpness — of the letter is uncommon. Many of those teams have historically averted public confrontation with Brussels.
The Commission is accused of undermining Europe’s industrial base, strengthening felony networks and ignoring scientific proof.
Von der Leyen and Hoekstra Face Their First Major Crisis
The stakes for the Commission are monumental. TED is not a well being or fiscal file. It has turn into a check for its credibility and the flexibility to steadiness public well being with financial survival. In a world the place geopolitical and financial landscapes shift at gentle velocity, the Union finds itself at a crossroads. This is the second to pause and mirror, not solely on the surroundings and defence, but additionally on the broader enterprise surroundings in Europe.
The proposed will increase are extreme and make no distinction between conventional flamable tobacco merchandise, like cigarettes, and smokeless merchandise which have decrease threat profiles. This sends the mistaken sign to these grownup people who smoke who would in any other case proceed to smoke that every one tobacco and nicotine merchandise are equal, undermining Europe’s ambition to succeed in beneath 5% smoking prevalence by 2040. An inexpensive, science-led strategy is important.
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