Tobacco Taxes in the EU: Tax Rates, Affordability and Revenues 2014-2025

Since the adoption of the European Union’s Tobacco Tax Directive (TTD) in 2014, tobacco excise duties have increased across member states, albeit at uneven rates. However, given the significant time lag since the last revision, cigarette affordability has increased in most countries, as excise adjustments failed to keep pace with inflation and income growth, especially during the post-2020 inflation surge. While nominal tobacco tax revenues have generally risen, inflation-adjusted revenues have declined. These findings highlight the need for a systematic revision of the EU tobacco tax framework, including possible indexation of excise duties to inflation and income growth, as envisaged in the revised TTD proposal.

Keywords: Taxation, Tobacco, Affordability

JEL classification: H25, L66

Countries covered: European Union