With the European Commission continuing to drag its feet on tobacco control, national governments are losing patience.
In a late-May letter, fifteen European finance ministries urged Commission President Ursula von der Leyen to “take without delay the necessary measures to update the directive” on tobacco taxation – last revised in 2011. Initially due in 2022, the long-postponed Tobacco Taxation Directive (TTD) overhaul – stalled by Big Tobacco lobbying – would raise minimum excise rates across the bloc, helping to harmonise tax regimes, tackle fraud and curb the rise in youth uptake of new tobacco products.
As the ministers rightly stressed, the TTD’s “current scope and provisions” are not fit to tackle “the significant challenges posed by ongoing…trends in the European tobacco market,” with the bloc’s soaring illicit trade among the most serious. Despite mounting appeals in recent months and an “almost unanimous agreement” among member-states for harmonised tobacco taxation, the Commission has once again omitted the TTD review from its annual work programme.
In the coming weeks, MEPs and civil society must therefore build on this national pressure – as well as encouraging signals from Tax Commissioner Wopke Hoekstra – to push for swift action. With tobacco-free goals and billions in lost tax revenue at risk, further delay is not an option.
Big Tobacco exploiting intra-EU tax divides
Despite this show of unity from EU heavyweights like France, Germany and Spain, a minority of countries, including Italy, Greece and Romania, continue to resist regulatory progress, insisting that an ambitious TTD revision is unnecessary as Europe’s smoking rates are already falling. Interestingly, the leaders of the opposition camp rank among the bloc’s largest tobacco producers, and seemingly share Big Tobacco’s bad faith.
In reality, Europe’s smoking prevalence has barely shifted since 2020. According to recent data, 24% of EU citizens still smoke – a stubbornly-high figure that masks major continental disparities. Smoking rates remain highest in southeastern Europe, with Bulgaria at 37%, Greece at 36% and Croatia at 35%, Meanwhile, Sweden, the Netherlands and Denmark report far lower rates, at 8%, 11%, and 14%, respectively. Unsurprisingly, these variations track closely with taxation levels: in Bulgaria, a 20-pack is taxed under €2, compared to €7.66 in the Netherlands.
Well aware that excise taxation is the single-most effective anti-tobacco tool, the industry has employed a years-long lobbying offensive to obstruct the TTD review. As the Smoke-Free Partnership’s Lilia Olefir has noted, “the invisible hand of the tobacco industry” has led to repeated delays – not only to the TTD but also the Tobacco Products Directive (TPD) – without any clear Commission explanation for its inaction on a law that would narrow the tax disparities exploited by the tobacco industry.
To circumvent tougher regimes in high-tax countries, Big Tobacco floods lower-tax markets with excess stock intended for resale across borders. Luxembourg, for instance, imported nearly 4.9 billion cigarettes last year – roughly eight times its domestic consumption – much of which ended up smuggled into France, contributing to the latter’s relatively high smoking rate despite its high excise taxes. In Bulgaria, where cigarette prices are around half those in neighbouring Romania and Greece, oversupply and overproduction fuel illicit markets across the region and as far as Belgium, highlighting the EU-wide scale of the problem.
Industry and allies enabling smuggling rise
Last year, Olefir and other leading civil society actors in tobacco control contributed to an MEP-led effort to expose Big Tobacco’s pernicious influence and provide Brussels concrete solutions to push back.
Spearheaded by then-French MEPs Annie Sophie Pelletier, Pierre Larrouturou and the late Michèle Rivasi, this anti-tobacco coalition published a White Paper presented at the European Parliament (EP) in April 2024. Crucially, the report directly links the EU’s failing tobacco traceability system to its reliance on companies with close ties to the tobacco industry, which has a major financial stake in the very black market the scheme is meant to curb.
As the University of Bath’s Tobacco Control Research Group has long emphasised, Big Tobacco initially attempted to manipulate government traceability efforts to its commercial advantage via the Philip Morris International-developed Codentify. Following Codentify’s broad condemnation by public health experts for violating WHO FCTC requirements on industry independence, the system has lived on through a network of private intermediaries that obscure the technology’s industry origins.
For example, Inexto, a Swiss firm that supplies key elements of the EU traceability system, earns over 70% of its revenue from tobacco companies – far above the limit set by WHO guidelines. Moreover, several of its top executives, including former CEO Philippe Chatelain, helped create Codentify while working for PMI, and later falsely rebranded it as a compliant and independent solution. Inexto’s work with firms like French IT giant Atos – a fellow EU track-and-trace provider – has further enabled Codentify’s deception-based rollout, particularly in markets such as Lithuania.
Dentsu Tracking, another major contractor in the EU’s system, also maintains troubling links to Codentify through its acquisition of Blue Infinity, a co-developer of the technology. Concerningly, Dentsu’s contract was awarded and later extended by the Commission without an open public tender or the company’s compliance with EU transparency rules. Furthermore, Dentsu has come under increased scrutiny for hiring former Commission official Jan Hoffman shortly after its contract was secured, raising serious conflict-of-interest questions that remain unanswered.
Brief window for unified action
The EU’s failure to establish a WHO-compliant traceability system has allowed the illicit tobacco trade to grow steadily since the current scheme was introduced in 2019, resulting in annual excise tax losses that OLAF estimates at over €10 billion – a figure MEPs place at close to €20 billion.
In this context, Brussels has no margin for error and must move quickly to get the TTD review over the line. In parallel, the similarly-delayed TPD revision must also be brought forward to establish a WHO-compliant independent track and trace system and a country quota mechanism on tobacco deliveries, as recommended in the White Paper – although this complementary endeavor must not serve as a pretext to delay the TTD review.
Moving forward, MEPs and civil society leaders must work together to support this long-overdue overhaul of the EU’s tobacco control framework, adding to the growing pressure from Europe’s national capitals at a crucial political moment. Encouragingly, European Tax Commissioner Wopke Hoekstra has expressed his intention to present a TTD proposal before the summer break, offering a long-awaited sign of urgency from within the EU executive.
With the door finally opening, now is the time for coordinated action to push through long-stalled reforms that can protect public health, strengthen the single market and reclaim billions lost to illicit trade. Hesitation to alter the status quo serves only smugglers and Big Tobacco interests – Brussels must now match the ambition of its member-states and put tobacco taxation back on the policy agenda.
Read more:
EU under mounting pressure to act on tobacco taxation amid illicit trade surge
