Endless delays and
In recent years, the EU’s tobacco tax policies have led to considerable uncertainty, particularly following the delay of the Tobacco Tax Directive. This ongoing lack of clarity has destabilised the legal tobacco market, putting both consumers and businesses at risk. It is better for the EU to focus on providing a more stable, predictable tax environment, rather than allowing the endless, looming threat of further tax hikes. The EU can reduce the allure of the black market by lowering tobacco taxes, which will benefit both businesses and consumers. Market conditions would be healthier and public health objectives would be better aligned.
In an effort to reduce tobacco consumption,
France, for example, has seen an explosion in contraband cigarettes, driven by some of the highest tobacco taxes in the EU. According to a KPMG report, more than a third of all cigarettes consumed in France in 2021 were illegal. Criminal gangs have capitalised on the new black market by setting up underground factories, as seen in a recent raid near Rouen which uncovered an illicit production site capable of manufacturing millions of cigarettes. Similarly, in Spain, authorities discovered a hidden underground factory where workers endured inhumane conditions. These examples underscore how excessive taxation can backfire, fostering conditions where illicit trade thrives and undermining public health efforts.
The recent delay in the implementation of the Tobacco Tax Directive has only amplified the uncertainty in Europe. Almost as harmful as a high-tax environment boosting the black market is rampant uncertainty around tax rates which could go up at any moment. As tax rates remain unclear, businesses are left to navigate a foggy landscape, unsure of how to plan for the future. Due to this unpredictability, the legal tobacco industry is stifled from investing and innovating, allowing illicit trade to flourish.
By lowering tobacco taxes, the EU can stabilise the market. More consistent and reasonable tax structures would have multiple benefits. First, it would make legal tobacco products more affordable, thereby reducing the temptation for consumers to turn to the black market. Second, it would provide businesses with the clarity they need to plan effectively, fostering a healthier competitive environment. The reduction in tax could also encourage greater compliance within the industry, helping to create a level playing field where legal businesses can thrive.
As well as being a financial burden on governments, the black market for tobacco also impacts citizens by fuelling organised crime. The illicit tobacco trade has been linked to criminal syndicates, with profits often used to fund activities such as human trafficking, drugs, and even terrorism. For instance, cigarette smuggling generates vast amounts of money for groups like the Taliban and Hezbollah, facilitating their operations across multiple regions. In Europe alone, the illicit tobacco market amounte
There is a direct risk to health, too. Consumers face severe dangers from unregulated tobacco products. These cigarettes often come from illicit manufacturing sites which operate outside the law, where quality control is non-existent. Such products may contain harmful substances like arsenic, pesticides, and even rat poison. Furthermore, as these products are sold by unlicensed vendors, there is no accountability or consumer protection, making buyers more vulnerable to unsafe goods. In addition to health risks, the growing black market undermines legitimate businesses, distorting fair competition and weakening overall regulatory frameworksThe consequences of an unchecked black market extend far beyond lost tax revenue, threatening both safety and stability in the wider economy.
Abandoning tobacco tax hikes does not mean abandoning the EU’s broader public health goals or the ambition of a ‘smoke-free Europe.’ Lower taxes would not necessarily equate to higher consumption, particularly if the savings are used to fund comprehensive smoking cessation programs and public health initiatives, like Britain’s successful examples. Moreover, by focusing on reducing the black market and improving market conditions for legitimate businesses, the EU could ensure any future health-related goals are achieved through sustainable and realistic means.
Ultimately, the goal should be to create a stable and predictable market which is in line with both public health and economic interests. By lowering tobacco taxes, the EU can help strike this balance, ensuring the stability of the legal market, reducing the appeal of illicit tobacco, and providing businesses and consumers with the certainty they need to navigate the future. This pragmatic approach would contribute to a healthier economy and make progress toward the EU’s public health objectives in a more sustainable and equitable manner.
Lika Kobeshavidze is a Georgian analytical journalist and a writing fellow with Young Voices Europe, specialising in EU policy and regional security in Europe. She is currently based in Lund, Sweden, pursuing advanced studies in European Studies.