Dr. Christopher Snowdon // 22 April 2026

This briefing examines whether the proposed revision of the Tobacco Taxation Directive (TTD) is a genuine risk-proportionate reform or simply a revenue grab that undermines public health goals.

Focusing on the European Commission’s July 2025 proposal, the paper analyses the sharp rise in minimum excise taxes on cigarettes (from €90 to €200 per 1,000 by 2032) and the introduction of new minimum taxes on lower-risk nicotine products such as e-cigarettes and nicotine pouches. These measures create a fundamental contradiction: while the EU claims to prioritise reducing smoking, the directive taxes demonstrably safer alternatives at rates that will erode their price advantage over cigarettes.The tensions are compounded by the single market.

Higher minimum taxes may reduce cross-border shopping but will significantly increase incentives for counterfeit and contraband cigarettes, especially in lower-income Eastern European countries. The uniform approach also ignores vast income differences across the EU, making the new taxes far more regressive in poorer member states.

The briefing explores the implications for harm reduction and consumer choice. By subjecting safer nicotine products to harmonised minimum taxes, the proposal risks reversing the substitution effect that has helped millions of smokers switch to far less harmful alternatives.

To resolve these contradictions, the author recommends preserving and widening the existing tax differential between combustible tobacco and lower-risk products. Taxation of e-cigarettes, nicotine pouches and heated tobacco should be left primarily to domestic governments.

The main findings of the briefing include:

• The TTD’s extension of minimum taxes to low-risk nicotine products conflicts with the EU’s goal of reducing smoking prevalence.
• Taxing safer alternatives will likely increase consumption of more harmful cigarettes.
• Higher minimum tobacco taxes will stimulate the illicit market, particularly in Eastern Europe.
• The proposal is highly regressive and fails to account for income differences across member states.
• The principle of differentiating taxes by relative risk is sound and should be strengthened, not diluted.
• A risk-proportionate reform would impose minimal or zero EU-level taxes on e-cigarettes and nicotine pouches to maximise substitution away from smoking.