Impact of the Revision of the European Union Tobacco Tax Directive: The Adjustment of Minimum Excises by Differences in the Cost of Living

This Policy Brief was written by Ángel López-Nicolás from Universidad Politécnica de Cartagena (UPCT) in Spain. The policy brief estimates the impact of adjusting the minimum excise duty established in the EU Tobacco Tax Directive (TTD) by the cost of living, determined by the Eurostat Comparative Price Level (CPL) index, in Member States. Specifically, under this proposed revision of the TTD, two-thirds of the minimum excise rate would remain a fixed amount, and one-third would vary according to the CPL, with updates every 3 years for inflation and changes in the CPL. If the TTD proposal established a nominal minimal excise tax of €215 per 1,000 cigarettes, for example, most countries (including Bulgaria, Croatia, Greece, Hungary, Poland, Romania, Portugal, and others) would only need to reach a minimum excise between €185 and €210 after the CPL adjustment. Germany, Austria and Sweden, on the other hand would need to reach slightly above €215 and Luxembourg would need to reach €239. An additional group of countries already implement a higher minimum excise than the proposal. The policy brief concludes with recommendations for decision makers to adjust the minimum excise to ensure a comparable burden across the EU.