The EU Council Compromise Text under the Cypriot Presidency Lowers Both the Real Value and the Binding Force of the EU Tax Floor (Policy Brief)

This Policy Brief was written by Ángel López-Nicolás from Universidad Politécnica de Cartagena (UPCT) in Spain. The policy brief assesses the impact of the compromise text of the Tobacco Tax Directive (TTD) under Cypriot Presidency. The Compromise Text replaces the fixed minimum of €215 per 1000 cigarettes from 2028 with a lower and incremental increases from 2028 through 2032. The Compromise Text also does not include an update for inflation until 2035, with capped adjustments despite high inflation. Under the Compromise Text, very few Member States would need to raise their minimum tax in 2028 and the required adjustment would be much smaller compared to the Commission proposal. The 2025 minimum tax in most countries already exceeds the Compromise Text floor, if the transition path and cost-of-living adjustments are considered, thus reducing the binding force of the reform. López-Nicolás concludes with recommendations for the EU to strengthen the TTD to ensure that it is effective in raising prices and reducing affordability of tobacco products.

A corresponding One-Pager can be found here.