The proposed revision of the Tobacco Taxation Directive (TTD) could increase revenue for Member States, tackle cross-border shopping and reduce demand for cigarettes and roll-your own.
If not tabled by the end of 2024, the TTD’s continued delay could cost the EU €23.92 billion in lost revenue that is urgently needed for meeting public spending needs, not least on health. The delay also means more than half a million lives could be lost from 2025 to 2028.
BRUSSELS, BELGIUM – Following the European Commission’s indefinite delay of the revision of the EU Tobacco Tax Directive (TTD), a new piece of research unveils the cost of delay across the EU. In addition to jeopardizing the Europe Beating Cancer Plan’s goal of a Tobacco-Free Generation, the estimated costs o of continued inaction are sobering.
Professor Ángel López-Nicolás, from the Universidad Politécnica de Cartagena, together with Dr. Rob Branston from the University of Bath and Dr. Hana Ross from the University of Cape Town, issued an analysis of the potential impacts of a revised Tobacco Taxation Directive (TTD) based on the unofficial draft of a Commission pproposal which circulated at the end of 2022
The proposal for a revised Directive was widely expected to be released in December 2022. This did not happen, and given the upcoming European Parliament elections in 2024, it is now clear the new tax proposal will not be out until at least 2025. This works primarily in the interest of the tobacco industry, who stand to lose from increased taxation on their products.
The analysis in Professor López-Nicolás’s research demonstrates that the proposal, if implemented in its current form, would raise tax revenue for Member States, encourage price convergence of cigarettes and rollyour-own tobacco (RYO) between countries, and reduce the overall demand for both products. The market demand for both RYO and cigarettes would decrease by an estimated 3.3% in 2025 and 4.1% in 2028. In addition to deterring consumption, the measures would benefit Member States, as the resulting increase in tax revenue across the bloc is predicted to be between 8.5% in 2025 (the first year of the new Directive coming into force) and 6.4% in 2028. At a time of increased pressures on public spending, such revenue increase could be of vital importance for public services across the EU, not least health sectors still recovering from the significant pressures of the COVID-19 pandemic
In the absence of progress before the end of 2024, the continued delay of the proposal could result in a loss of revenue for all EU Member States totalling €23.92 billion between 2025 and 2028. Such a delay has a human cost too, with an estimated 536,533 additional lives lost that could otherwise have been saved by the proposed taxation framework.
“The Tobacco Taxation Directive (TTD) proposal can’t be further delayed. Findings of the newly released report are clear: continued inaction would lead to significant loss of both lives and vital funding for public services, including health” observed Lilia Olefir, Director of the Smoke-Free Partnership (SFP). She added: “The main victims of this failure to act are the less privileged. We know that people from disadvantaged socioeconomic backgrounds are disproportionally impacted by the harm from tobacco consumption, as well as being more dependent on support from public spending.”
Most EU member states are facing unprecedented circumstances: cigarettes and roll-your-own tobacco are becoming more affordable, the prevalence of e-cigarette use is increasing among teenagers and young people, while the EU institutions fail to set minimum rates for heated tobacco products and electronic cigarettes.
Another Big Tobacco victory across the EU is not in the public interest. We call on governments across the EU to do the right thing for their citizens and act now. We additionally call on the EU to offer guidance to the Member States without further delay.
