The European Commission’s sweeping proposal to overhaul tobacco and nicotine taxation has triggered strong reactions among EU member states after its presentation at the Economic and Financial Affairs Council (Ecofin) in Luxembourg earlier this month. 

Under the plan, minimum excise duties on cigarettes and roll-your-own tobacco would rise sharply, while for the first time new products such as e-cigarettes, heated tobacco and nicotine pouches would be brought under excise taxation. 

According to the draft directive, the minimum tax on cigarettes would increase from 60 per cent to 63 per cent of the weighted average retail price and from €90 to €215 per 1,000 pieces.  

Roll-your-own tobacco would be taxed at 62 per cent of the retail price and at least €215 per kilogram.  

For newer products such as heated tobacco and e-cigarettes, a minimum tax of 45 per cent or €88 per 1,000 pieces would apply from 2028, increasing gradually until 2032, as outlined in the European Commission’s proposal. 

If approved, the new rates could push the retail price of a pack of cigarettes from around €4.50–€5.00 to €7.00–€7.50, while roll-your-own tobacco could rise from €7.00 to €13.00. 

Commissioner for Climate Action and Clean Development, Wopke Hoekstra, described the reform as necessary, stressing that Europe still has some of the highest smoking rates globally.  

“There are new products that deliberately target young people, even 15-year-olds, creating a new addiction to nicotine,” he said.  

The Commission argues that the existing rules, set out in Council Directive 2011/64/EU, no longer reflect current market realities or consumption patterns. 

The reform is designed to align fiscal policy with the objectives of Europe’s Beating Cancer Plan, which aims to reduce the EU smoking rate to below five per cent by 2040.  

According to the Commission’s statement, the update could generate around €15 billion in additional annual revenue across the bloc and save nearly €6 billion in healthcare costs linked to tobacco-related diseases. 

Still, several member states, including Italy, Bulgaria and Romania, have warned that steep excise hikes could fuel illicit trade, while Greece, Croatia, Luxembourg and Hungary say the increases are too high.  

At the same time, a coalition of 15 countries led by France and the Netherlands supports the reform, calling for stronger public-health alignment fairer taxation across markets. 

In Cyprus, concerns are growing that higher prices may further encourage cigarette smuggling from the north. In 2024, the share of illicit cigarettes reached 14.3 per cent of total consumption, up from 11 per cent a year earlier, corresponding to roughly 130 million illegal cigarettes and an estimated €22 million in lost public revenue.  

Across the European Union, around 38.9 billion illicit cigarettes were consumed last year, resulting in €14.9 billion in foregone tax revenue, according to Europol. 

Beyond the issue of smuggling, tobacco use itself remains deeply entrenched in Cypriot society and continues to pose a major public health challenge. According to the Tobacco Atlas, around 34 per cent of adults in the country smoke, one of the highest rates in Europe, with 46 per cent of men and 22 per cent of women identifying as current smokers.  

The impact is substantial. Tobacco use is responsible for more than 600 deaths in Cyprus each year, while an estimated 163,000 adults and 14,000 children aged 10 to 14 use tobacco daily. On average, each adult consumes about 2,564 cigarettes annually, a figure well above the global average. 

The Commission’s plan introduces several major changes, including the alignment of excise rates across member states to reduce disparities, the extension of the directive to cover new tobacco and nicotine products, and tighter monitoring of raw tobacco, which has long been a source of fraud.  

The electronic excise monitoring system, already applied to alcohol and fuel, would now also track the movement of raw tobacco across the EU to help detect and combat illicit trade. 

The World Health Organisation (WHO) has welcomed stronger fiscal measures, noting that roughly 26 per cent of EU citizens smoke, compared with with Cyprus’ much higher 34 per cent, and that taxation remains “the single most effective tool” for reducing tobacco use.