Politico Europe Reports
"Approximately 24 Trillion Won in Additional Tax Revenue Possible"
Reports have emerged that the European Union (EU) is pushing for tax increases of up to 258% on certain tobacco products.
According to an internal impact assessment document obtained by Politico Europe on June 12 (local time), the European Commission is considering raising taxes by 258% on roll-your-own tobacco and by 139% on conventional cigarettes.
The document states that the Commission has proposed three scenarios, but it prefers the option with the highest tax increase. It estimates that this could generate an additional 15.1 billion euros (23.8149 trillion won) in tax revenue.
If this plan is implemented, the tobacco tax per 1,000 cigarettes would rise from 90 euros (142,000 won) to 215 euros (340,000 won). For roll-your-own tobacco, the tax would increase from 60 euros (95,000 won) per kilogram to 215 euros. For cigars, known as leaf-wrapped tobacco, the tax would surge by 1,092%, from 12 euros (19,000 won) per kilogram to 143 euros (226,000 won).
Liquid and heated tobacco electronic cigarettes could also be subject to taxation. The proposal under consideration would impose a tax of 0.36 euros per milliliter for e-liquids with a nicotine concentration exceeding 15 mg/mL, and 0.12 euros for those with lower concentrations.
In the document, the Commission stated, "Raising tobacco taxes and prices has proven to be the most effective measure for reducing overall tobacco consumption," adding, "The current minimum tax rates are not making an effective contribution to reducing tobacco use."
The Commission also analyzed that approximately 40% of the reduction in smoking within the EU over the past decade can be attributed to tax policy.
Previously, the European Commission had faced pressure from member states to include new products such as electronic cigarettes in the revision of the Tobacco Excise Directive (TED). As the use of new tobacco products among youth and young adults has increased, there is a perceived need to revise the TED, which was enacted in 2011. The TED is a directive that sets the minimum excise tax rates for tobacco, and member states set their own rates based on it.
Last year, 16 member states, led by the Netherlands, sent a letter to the Commission pointing out that differences in tax rates among member states are distorting the single market. However, countries such as Italy, Greece, and Romania believe a more cautious approach is necessary.
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