The EU Tobacco Tax Directive needs a quick and thorough update, because both the minimum rates and the scope of the directive are outdated. The review “is not a finance issue, but a health issue,” an EC official said at a European Respiratory Society conference. 

By Eline Goethals

The European Respiratory Society (ERS) convened policymakers, health experts, and economists last week to discuss tobacco taxation in the light of the ongoing revision of the EU’s Tobacco Tax Directive, currently under negotiation in the Council. With Cyprus now holding the rotating presidency after Denmark, concerns are mounting that the compromise texts being prepared may weaken the Commission’s original ambitions.

“Stop regulating nicotine as a consumer product. It is a dangerous drug.” The stark message from Professor Thomas Münzel of the European Society of Cardiology cut through technical discussions at a Brussels tobacco taxation event this week, crystallizing a growing frustration among European health advocates: current policy frameworks are fundamentally misaligned with the nature of the threat.

Outdated taxation framework under pressure

Patrice Pillet, representing the cabinet of responsible Commissioner Wopke Hoekstra, opened the event with a blunt assessment of the current European Tobacco Tax Directive. “This is not a finance issue, this is a health issue,” he said, outlining three fundamental failures of existing legislation.

First, harmonization across member states has become “outdated”. Second, minimum tax levels – currently set at € 90 per 1,000 cigarettes – are “clearly too low and not useful,” having remained unchanged for over a decade while most member states now tax well above these minima. Third, and perhaps most critically, the scope of regulation has failed to keep pace with industry innovation: e-cigarettes fall completely outside the directive, heated tobacco products lack any harmonized EU definition or minimum rate despite widespread national taxation, and nicotine pouches remain entirely unregulated at EU level.

Pillet drew parallels with past regulatory failures. “When I was younger, light cigarettes were sold as less dangerous,” he said, “but then we discovered this was not true.” The lesson, he suggested, is that the industry consistently stays ahead of regulators by introducing new products that exploit gaps in legislation.

EC’s proposal under fire

The European Commission’s proposal, submitted in July 2025, aims to address these shortcomings by increasing the cigarette minimum to € 215 per 1,000 (a 139 percent increase), extending the scope to cover e-cigarettes, heated tobacco, and nicotine pouches, introducing automatic inflation indexation every three years, and strengthening harmonization measures. Public support appears strong: a 2024 Eurobarometer survey found that tobacco taxation consistently scores highest among citizens’ priorities for health policy.

Yet Pillet acknowledged the challenges ahead. “There is a lot of lobbying,” he said, with opponents arguing that higher taxes are “not efficient” and will simply drive cross-border sales. “Many thanks for your continued support,” he told the room. “We will need it to negotiate this proposal.” 

E-cigarettes as trojan horse

The first panel discussion laid bare the tactics that have made current tobacco regulation so difficult. Frank Borm of the Netherlands Cancer Institute framed the challenge in stark terms: the tobacco industry’s business model depends on addicting children to ensure customers for life.

“E-cigarettes are a trojan horse to get young people addicted again,” Borm argued. While the industry promotes these products as ‘harm reduction’ tools for adult smokers, the evidence increasingly suggests they function as entry points for youth nicotine addiction.

The health consequences extend beyond the familiar risks of traditional cigarettes. Borm cited recent research showing that nicotine itself causes cardiovascular damage and mental health issues including anxiety. “These are issues that will affect them for the rest of their lives,” he said.

Enormous lobby force

Cassandre Bigaignon of the French antitobacco organisation Contre-Feu presented findings from their recent collaboration with STOP on European Commission lobbying. The numbers are staggering: 49 organizations representing tobacco industry interests, employing at least 149 in-house lobbyists (likely an underestimate, as figures are self-declared, Bigaignon noted), with combined budgets exceeding € 14 million.

“There are many harm reduction organizations,” Bigaignon noted – a reference to industry-funded groups that promote narratives about ‘safer’ nicotine products. The EU has become a critical battleground because companies like Philip Morris International have invested heavily in new product manufacturing facilities in member states including Greece and Italy, creating leverage for access to MEPs, Commission officials – especially those in DG TRADE – and Council members.

“The harm reduction narrative still works in the eyes of policymakers who don’t know much about this topic,” Bigaignon observed. She pointed to a disturbing pattern: when non-EU countries like Mexico move to ban heated tobacco products which might be produced in the EU, the industry turns to DG Trade, arguing for intervention on grounds of potential income loss. “The EU then puts pressure on countries wanting to limit tobacco industry products,” she said.

Article 5.3 of the WHO Framework Convention on Tobacco Control, which requires governments to protect public health policies from commercial interests of the tobacco industry, remains poorly enforced in the EU.

‘Regulate nicotine as pharmaceutical’

Professor Münzel presented findings from his recent cardiovascular research on nicotine. His legislative recommendations include equal rising nicotine taxes across all products, banning online sales, and – most fundamentally – reclassifying nicotine regulation from consumer product law to pharmaceutical drug legislation.

During discussion, moderator Filippos Filippidis of the ERS emphasized a point often lost in harm reduction debates: the addictive nature of nicotine itself is the core issue, regardless of delivery method. He argued that policymakers should not allow an industry to get people addicted for life.

Borm added that the focus on comparing harm levels between products serves the industry’s interests. “The tobacco industry wants us to argue about potential harm reduction levels,” he said, “while it’s clear that they just want to addict young children and turn them into lifelong customers.”

Taxation works, if done right

The second panel, moderated by Erin Roman, director of the Smokefree Partnership since last November, shifted focus to fiscal policy effectiveness. David Boublil from the European Commission DG TAXUD opened with a provocative challenge: “If we find a way to stop all smokers and nicotine users and can find a replacement for the revenue, of course we should do it.”

Dr. Alexa Segal of the OECD pointed to successful case studies in France and Mexico, as well as current data from Southeast Europe, demonstrating that higher tobacco taxes effectively reduce consumption. The correlation is robust across different contexts and price points.

No effect on illegal trade

Professor Hana Ross of the Vienna Institute for International Economic Studies addressed head-on the most common argument against tax increases: that they drive illicit trade. Her research, drawing on the Taxes in Europe Database, found no association between cigarette excise tax levels and illegal cigarette trade across EU member states between 2014 and 2024. Countries with higher taxes did not experience higher levels of illicit trade.

“Is it illegal or is it cross-border sales? We need to make this distinction,” Ross emphasized. Cross-border shopping – legal purchasing in lower-tax jurisdictions – is often conflated with counterfeit or smuggled products in policy debates. The actual scale of counterfeit manufacturing, when measured against total consumption, is often ‘tiny’, she said, amounting to ‘two hours of smoking’ in some countries.

Ross also dismissed employment concerns frequently raised against tax increases. Even in countries like Romania and Bulgaria, “these conversations are often about a very small number of jobs that might be under pressure anyway,” she said, noting mechanization and market consolidation trends. “Yet this is being used as a threat towards the EU and local governments to ease up on tobacco taxation.”

Her taxation recommendations were clear: “The simpler the better. The more complicated, the more loopholes the industry is going to find. Just aim for high and simple.”

Cyprus presidency tests EU ambition

Discussion turned to a leaked Cypriot presidency compromise text on the Tobacco Excise Directive, which has exposed divisions within the Council. According to a report by EU Reporter, Cyprus appears to be pursuing a more industry-friendly approach than Denmark’s earlier presidency had taken.

“Our proposal is reachable, feasible,” Boublil said of the Commission’s original proposal, but he acknowledged the structural challenge: tax decisions in the Council require unanimity. “I fear the Council might go for a compromise which will have lower rates installed over longer periods than proposed by the Commission” he said, expressing hope for “the most ambitious version possible” to survive Council negotiations.

Ross urged speed. “Consider the time for implementation,” she said. “It seems like Cyprus wants to push it a bit on the timeline. We don’t want to wait longer, especially for new products.” Every delay, she implied, allows the industry to further entrench emerging product categories before they fall under taxation frameworks.

Boublil was frank about the pace of EU decision-making: “We’re never really fast.” On the question of earmarking tobacco tax revenues for health programs – a popular idea among advocates – he was sceptical. “General budget is better for the level of the state. Let member states decide themselves.” His position suggests the Commission prioritizes securing tax increases over prescribing their use.

The road ahead

The Brussels event revealed a stark gap between public health evidence and political will. Experts find consensus on clear prescriptions: treat nicotine as a dangerous drug rather than a consumer product, implement high and simple taxation across all nicotine delivery systems, ban online sales, and enforce Article 5.3 to limit industry interference on European level.

Yet these recommendations face a lobbying apparatus that has invested heavily in European institutions, a unanimity requirement that empowers individual member states to block progress, and a Council presidency that appears more receptive to industry concerns than its predecessor was.

The stakes extend beyond Europe. As Bigaignon noted, EU positions on tobacco regulation influence global trade policy, with potential bans in countries like Mexico facing pressure through trade dispute mechanisms. The credibility of European health policy, and its willingness to prioritize public health over commercial interests, is being tested.

For now, the negotiations continue in the Council. The outcome will determine whether Europe’s youngest citizens receive meaningful protection from nicotine addiction – or whether the regulatory lag continues for another generation.

The European Respiratory Society event ‘Taxing Times for Tobacco: Effective EU fiscal policy for the protection of Europe’s youngest citizens’ took place on 27 January 2026 at the Press Club Brussels.

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