Buzz@Bruss!

JTI EU Affairs bulletin 

home page ← Buzz@Bruss! Edition #7 ← To tax a category to death 

The European Commission’s revised Tobacco Excise Tax Directive (TED) has the potential to strike a balance between public health goals, smooth functioning of the market, and fiscal stability. Instead, by proposing a minimum excise duty for nicotine pouches seven times higher than Sweden’s rate, it has managed to score a classic own goal. 

Smoke-free alternatives, such as nicotine pouches, offer adult smokers a viable option to avoid the health risks linked to inhaling smoke from burning tobacco. But harm reduction only works when these alternatives are both accessible and appealing to the consumer. By proposing an excessive minimum tax rate, the Commission seems to be willingly undermining this very principle. Make no mistake, imposing this move could effectively kill the category, drastically narrow consumer choice and, in doing so, jeopardize the EU’s own strategies to reduce smoking-related harm. 

Ironically, the Commission’s own impact assessments emphasize that harmonizing excise taxation should improve public health, ensure market stability, and prevent fraud. Yet the proposed tax rate on nicotine pouches would likely push consumer prices so high that it discourages the use of lower-risk alternatives. Worse still, the tax hike could open the door to unregulated markets, exposing consumers to potentially unsafe, illegal products – precisely alienating those trying to quit smoking and adopt safer nicotine choices.

This approach becomes even more perplexing in the face of Sweden’s noteworthy example. Sweden is the only EU Member State with a smoking rate below 5%, thanks to giving smokers access to oral nicotine products, supported by a moderate tax rate. TED, however, appears to disregard this success, and from a neutral observer’s perspective, seems intent on eliminating the very category that contributed to Sweden’s progress. It’s no surprise that Sweden has spoken out against the proposal.

The path forward is clear: a more progressive approach to EU-wide minimum rates that allows consumers to consider alternatives such as nicotine pouches and their reduced-risk profile. This approach would not only deliver stable fiscal revenues and maintain market equilibrium but also support harm reduction.