MONDAY AT ECOFIN, THE COMMISSION'S INSISTENCE ON +140% TAXATION ON TOBACCO PRODUCTS - Filenews 6/11 by Petra Argyrou
The European Commission throws a "hot potato" on Monday at the table of EU finance ministers. It brings back for the final discussion its proposal for exorbitant tax increases on traditional tobacco products and their extension to newer types of tobacco and nicotine, such as e-cigarettes, heated canoes and nicotine pouches.
At Monday's Ecofin meeting, the Irish presidency is seeking to secure a political agreement, which is already meeting with strong opposition. The Commission considers existing consumption taxes obsolete and invokes "support for public health and alignment of fiscal policy with current market dynamics".
PROPOSALS FOR SPECIAL TAXES
The Commission's initial proposal was tabled in July 2025 and provided for exorbitant increases in the minimum European excise duties. On cigarettes, the minimum special tax is proposed to be increased by 138.9% from €90 to €215 per 1000 cigarettes. The table shows the increases in special taxes per item.
TABLE
| Genre | Commission proposal |
| Cigarettes | €215 per 1000 cigarettes |
| Rolling smokes | €215 per kg |
| Cigars, cigarillos | €143 per 1000 pieces |
| Heated smokes | €108 per 1000 pieces |
| E-cigarette liquids | 12 – 36 cents per ml |
| Nicotine Pouches | €143 per kg |
Negotiations on the Commission's proposal had begun under the Danish presidency, in the second half of 2025, to then be taken over by the Cypriot presidency in January 2026, which attempted to appease the reactions of countries by submitting a compromise proposal. The Cypriot proposal provides for three transitional periods and a gradual increase in taxation on cigarettes, starting with €140 per thousand for 2028 – 2029, which is then increased in 2030 to €170 and in 2031 to €200. Revisions followed, to no avail. In June, Cyprus withdrew the issue to Ecofin, due to the inability to reach a consensus.
The Irish presidency has prepared a new compromise text on which the finance ministers will be asked to take a position on Monday. The final proposed rates have not, however, been made public.
Strong reactions
The package of tax measures for tobacco products is met with serious resistance, led by Sweden, while Italy and Hungary have expressed serious reservations.
Sweden flatly rejects the increase in the excise tax on nicotine pouches. He argues that they are a lower-risk alternative to conventional smoking and that they should not be taxed, like cigarettes.
Italy, on the other hand, puts forward the argument that large increases will strengthen smuggling over the legal market, Hungary seeks to protect the interests of the domestic tobacco industry.
Only by unanimity
The revision of taxes on tobacco products requires unanimity in the Council of the EU. In practice, this means that if a member state rejects, then the Commission's proposal is impossible to adopt. Last June, the European Parliament rejected the European Commission's proposal by 439 votes against, 181 in favour and 38 abstentions. However, its rejection by the European Parliament does not bind the European Council.
