Taxing times for tobacco: effective fiscal policy for the protection of Europe’s citizens
wiiw Health Economics and Policy Analysis (HEPA) Senior Research Associate Dr Hana Ross, discussed the proposed revisions to the EU Tobacco Tax Directive at a policy event in Brussels.
By Nora Kungl and Hana Ross
Tobacco consumption remains the leading cause of preventable death in Europe. Half of all tobacco users die from tobacco-related causes, including lung cancer, chronic obstructive pulmonary disease (COPD), coronary artery disease and strokes. To address this harm, in July 2025, the European Commission published a proposal for a revised Tobacco Taxation Directive (TTD), representing a critical step towards aligning tobacco policy with current public health priorities. The TTD governs both tax rates and tax structures within the EU while also exerting significant influence on excise tax policies across the rest of Europe and beyond.
A series of policy events organised by civil society organisations and think tanks began in late 2025 and will continue through 2026, with the aim of explaining the benefits of the proposed TTD to both the public and policy makers. As adoption of the revised TTD requires unanimity – meaning all 27 EU member states must vote in favour of it – a proactive and comprehensive approach is essential to exert sufficient pressure on EU member states to secure agreement on the revisions.
The first event of 2026, organised by the European Respiratory Society (ERS) and the European Lung Foundation (ELF) at the Press Club Brussels Europe on 27 January, brought together EU policy makers, representatives of wiiw-HEPA and the OEDC, clinicians and patient advocates to discuss the health and economic benefits of the proposed TTD. The event, which featured keynote remarks from the European Commission and two panel discussions, provided participants with tailored evidence to help build support for a multisectoral consensus.
Speakers noted that the current directive’s minimum tax levels and scope are outdated, since the current rates have been eroded by inflation and the TTD does not fully address new products such as e-cigarettes, heated tobacco and nicotine pouches. They emphasised that the revision should be considered primarily a public health measure rather than merely a fiscal one. The discussion examined the scale and intensity of tobacco industry lobbying surrounding the TTD review process. At the same time, participants pointed to evidence indicating that simple, high excise taxes are effective in reducing tobacco consumption.
Dr Ross presented several case studies from Eastern Europe that addressed common arguments against the proposed revision of the TTD. She highlighted that countries with higher tobacco taxes do not tend to experience higher levels of illicit trade, emphasised the importance of distinguishing between illicit trade and legal cross-border purchases, and noted the relatively minor role of the tobacco industry in job creation despite claims to the contrary.
In the coming months, wiiw-HEPA will continue to inform public discourse and policy debate on the TTD revision, including through its ongoing evaluation of the fiscal and health implications for the European Parliament and through participation in a range of EU- and national-level technical consultations.