With an urgent letter to Ursula von der Leyen and Wopke Hoekstra in December, the tobacco sector tried to change the European Commission’s mind about the proposed revision of the Tobacco Excise Directive. Drama was not shunned. 

By Bas van Lier

Aided by the European news platform EU Reporter, which does not hesitate to be paid by companies to lobby for them in Brussels, the tobacco lobby is trying to influence European decision-making on the revision of the Tobacco Excise Directive (TED) with big guns. Last month, EU Reporter reported on an urgent letter from 80 companies and trade associations of the tobacco and nicotine industry to the European Commission about the ‘disastrous’ consequences of the proposed changes to the TED.

With a sense of drama, EU Reporter’s founder Colin Stevens writes: “The letter’s message is unmistakable: if Brussels forces through this tax plan, the result will be economic collapse in parts of Europe, a surge in illicit crime networks, and the destruction of innovation meant to help smokers quit.”

The letter of 5 December to Commission President Ursula von der Leyen and European Commissioner Wopke Hoekstra with Tax Affairs in his portfolio – also sent in copy to all 27 EU finance ministers – is itself not devoid of drama. “Europe should not undermine its economy and public health with ineffective tax policies,” it says. The proposed amendments to the directive – higher minimum excise duty rates on tobacco and, for the first time, EU-wide minimum rates on e-cigarettes, heated tobacco and nicotine pouches – would have “dramatic consequences for Europe’s economy” without significant health benefits for the European population.

Dramatic economic consequences

The authors of the letter make it appear that the European economy is heavily dependent on the tobacco industry “at a time of geopolitical uncertainty and fragile supply chains”. The sector would contribute € 224 billion to the combined GDP of the EU-27 (1.3%) and cover half of the EU’s defence spending with € 112.9 billion in VAT and excise revenues. The sector provides 2.1 million jobs in Europe.

The tenor of the letter is that all this economic impact will disappear if the EU goes ahead with the proposed revision of the TED. Because, according to the authors – and according to the established fallacy of the tobacco industry – higher excise duties will irrevocably lead to a huge increase in the illegal trade in tobacco and organized crime. Of course, reference is made to the annual alarm reports that KPMG draws up on the illegal trade on behalf of and manipulated by Philip Morris International.

The Netherlands and France as examples

Reference is also made to the developments in the Netherlands and France, where ‘excessive’ excise duty rates are said to have brought cross-border purchases and illegal trade to extreme heights. The Netherlands is said to have lost up to 900 million euros in tax revenue in four years.

However, the reality turns out to be less disastrous. In October, we reported on French research into the parallel market for tobacco, which showed that the amount of tobacco on which no taxes had been paid in France averaged 17.7%. The majority of these are cross-border purchases, which are simply allowed under certain restrictions. And in November, Dutch State Secretary of Finance Eugène Heijnen said in response to news from De Telegraaf that as far as he is concerned, there is no question of ‘lost tax revenue’ as a result of the recent excise duty increases.

‘No effect on health’

The letter also wants policymakers to believe that the higher excise duty rates have no effect on public health, because smokers would not stop at all. Again, reference is made to the Netherlands and France, where the smoking prevalence is said to have hardly decreased. In the Netherlands, an increase in total cigarette consumption of 1 percent between 2023 and 2024 is even reported. One must have guts to blame this increase on excise duty increases and to leave the enormous marketing boost of e-cigarettes and vapes among young people unmentioned. Since the flavoured disposable vapes came on the market, the steady decline in the number of young smokers has come to a halt and has now reversed. In addition, the Dutch National Institute for Public Health and the Environment calculated that the recent excise duty increases had induced 200,000 people to stop.

The new excise duty rates would also have a disproportionate impact on the poorest countries and poorest households. An easy reasoning that ignores the fact that the lowest incomes are not helped by cheap cigarettes, but by more healthy years of life and more money in their wallets.

Powerful and effective action

The authors make it seem as if the tobacco and nicotine industry with its ‘less harmful’ alternatives has the best interests of humanity at heart and contributes to Europe’s innovation climate. And cooperative as always, the industry says it stands “ready to engage in constructive dialogue” to shape the future.

The letter mentions that “the time to act boldly – and effectively – is now.” And that, indeed, is exactly what the recipients of the letter should do without caring about its contents, as the WHO-FCTC treaty prescribes. Because harmonisation of higher excise duties is of the utmost importance for 450 million Europeans, who, when in good health, together form an economic power of unprecedented magnitude.