ACS

The EU Commission has unveiled proposals to increase minimum tobacco duties across the EU. The proposal would increase tobacco duties in 11 countries, although they would be less than current duty rates in the UK.

The Commission sets out that price increases on tobacco products are the single most effective way of discouraging smoking, a leading cause of illness and death in the EU. The proposal would increase cigarette prices over the next five years by more than 20% in 11 countries, based on 2006 figures. Smokers in Poland would see the highest jump, about 47%, followed by Slovakia and Bulgaria, with 36%.

The Commission said the higher minimum excise duty would reduce demand for cigarettes by 10% by 2014.

The proposal “supports the EU policy to reduce tobacco consumption and narrow the differences in price levels of tobacco products within the EU,” said László Kovács, commissioner for taxation and customs.

“It will help reduce cross-border shopping and tackle illicit trade, which undermine the revenue and the health objectives of member states which impose high taxes to deter smoking.”
The proposal would also redefine cigars, cigarillos and pipe tobacco, which enjoy a lower tax rate. The new definition would prevent cigarette-like products and fine-cut tobacco from being sold in this category.

Between 2002 and 2006, cigarette consumption decreased by more than 10% in the EU, but the consumption of fine-cut tobacco rose 10%.

James Lowman, ACS Chief Executive said: “So long as tobacco duty is so much lower in our EU neighbours there will be an incentive to traffic cigarettes across borders. We welcome any moves towards the harmonisation of duty rates. However, increasing rates in the EU will increase the incentive to illegally import from outside the Eurozone, this trade in often counterfeit product will continue to be a pressing threat.”