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Higher tobacco taxes key to EU’s anti-smoking drive - 15/07/2008

Cigarette butts

Minimum tax EU countries must levy on cigarette and tobacco sales would rise gradually under proposal aimed at reducing smoking and smuggling.

Cigarette prices would jump by more than 20% in 11 countries under a commission proposal to reduce the differences in tobacco taxes between EU countries.

The proposal is part of a policy mix that includes more protection from exposure to tobacco smoke, better regulation of the contents of tobacco products and tighter restrictions on advertising.

While these measures have proven useful, price increases on tobacco products have been found to be 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.”

Large disparities in tobacco taxation across the EU are distorting the market, with some countries charging six times the minimum allowed.

The proposal would also redefine cigars, cigarillos and pipe tobacco, which enjoy a lower tax rate even though they are also harmful to health. 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%.

More on tobacco taxation in the EU

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