The European Economic and Social Committee (EESC), the advisory body that represents employers, unions and other civil society organizations in the EU, has warned that sharply or excessively raising excise taxes on tobacco and other nicotine products may end up having the opposite effect to that intended. As explained by approved opinion in its plenary session on February 18 and 19, these types of increases can cause an increase in illicit trade, reduce revenue and weaken the public health objectives of the European Union.
The text, prepared within the framework of the review of the Tobacco Taxation Directive, is updated to include products that have gained weight in the market in recent years, such as heated tobacco, vaping liquids or nicotine pouches. The European Commission presented its proposal on July 16, 2025 with two legislative initiatives, COM(2025) 580 and COM(2025) 581, with the aim of modernizing rules that the Commission itself considers outdated in light of the evolution of consumption.
The EESC’s warning focuses on the risk that a rapid increase in taxes will shift demand towards illegal channels and generate more incentives for smuggling (something that is already happening in countries like Holland or France), especially in border areas or in countries with lower purchasing power, where price differences already push part of consumption towards cross-border purchases. In the internal debate of the plenary session, several members explained that tobacco taxation has a different weight depending on the Member State and demanded flexibility to avoid market distortions.
The opinion advises that any adjustments be made gradually and be accompanied by control measures, such as greater customs cooperation, cross-border anti-smuggling initiatives and tracking and traceability systems. The community proposal, in fact, contemplates extending surveillance to raw materials such as raw tobacco to make diversions towards illegal circuits difficult.
One of the political keys of the text is the defense of taxation “proportionate to risk.” The EESC maintains that non-combustible products and those considered lower risk should not bear the same burden as traditional cigarettes, an idea summarized in the principle “less harm, less taxes”. The ruling also points to the need for clearer legal definitions for categories such as heated tobacco, in order to differentiate them from cigarettes in the design of taxes.
Although the debate is still open, in Sweden, consumer organizations in favor of harm reduction have called on the Government to oppose tax harmonization which, in his opinion, does not sufficiently differentiate between cigarettes and alternatives such as snus or nicotine pouches. This approach was also mentioned in the EESC plenary debate. The reform, in any case, now enters the negotiation between governments in the Council of the EU, where taxation requires unanimity, a requirement that usually slows down and toughens pacts.