Date: September 8, 2025
Source: Independent Analysis — Briefing on Fiscal Health Policy in the EU
The Essentials
Type/Scope
Public policy analysis of the European Union’s revised Tobacco Excise Directive (TED/TTD), focusing on combustible tobacco vs. lower-risk alternatives (vapes, heated products, pouches).
Key Figures
United Kingdom: Smoking rates dropped from 20.2% (2011) to 11.9% (2023); among 18–24-year-olds, from 25.7% to 9.8%.
New Zealand: Daily smoking fell from 16.4% (2011) to 6.9% (2023); daily vaping rose to 11.1%.
UK Disposable Vape Use: Rose from ~1.2% to 22.2% between January 2021 and April 2022; among 18-year-olds, from 0.4% to 54%.
Sweden: Daily smoking rates below 5%, with cancer incidence 41% lower than the EU average, linked to widespread use of snus and nicotine pouches.
Illicit Market: In 2024, ~38.9 billion illicit cigarettes were consumed in the EU (9.2% of total), causing €14.9 billion in lost revenue. France led with 18.7 billion illegal units, followed by the Netherlands (17.9% of national consumption) and Spain (1.4 billion).
Price Elasticity: In New Zealand, the cross-elasticity of 0.16 between vapes and cigarettes; the availability of e-cigarettes reduced cigarette consumption by 42.8%.
Economics
EU member states collect ~€70 billion annually from tobacco taxes.
The TED draft expands the tax net to include e-cigarettes, heated tobacco, nicotine pouches, and even raw tobacco under track & trace.
Cigarettes remain highly taxed, but non-combustible alternatives risk losing their price advantage if minimums rise too close to combustible levels.
Elasticity studies show that higher prices on vapes can drive users back to cigarettes, counteracting harm reduction goals.
Small producers of alternatives face disproportionate burdens compared to large multinationals, which benefit from regulatory ambiguity.
Equity and Politics
The rhetoric is framed in terms of prevention and harmonization, but fiscal dependence dominates.
Neutralizing price differentials penalizes smokers seeking less harmful options, especially low-income populations.
Evidence shows access to safer alternatives reduces smoking, yet EU policy flattens risk levels under “precaution.”
Rising prices risk fueling illicit trade, already significant in several member states.
For citizens, taxation extends state power into daily micro-decisions, while vulnerable groups—youth, the poor—become collateral damage.
Why It Matters
The TED revision exposes a moral choice disguised as a fiscal technicality:
To align taxes with proportional risk, encouraging substitution toward less harmful products.
Or to flatten distinctions, treating unequal risks as equal, turning prevention into dogma, and public health into accounting.
Evidence from Sweden, the UK, and New Zealand shows that when alternatives are accessible and socially legitimate, smoking declines—along with health system burdens. Penalizing those alternatives deepens inequalities, traps the poor, and strengthens illicit markets.
Evidence-based policy, in this context, becomes a pragmatic act of compassion: reducing harm where life actually happens.
The Takeaway
The TED is more than a tax directive: it is a choice between revenue management and harm reduction. Aligning taxation with proportional risk makes fiscal policy a lever for health equity; flattening distinctions only sustains smoking, smuggling, and inequality.
For Further Reading
Read the full analysis here:
Taxed Compassion
In the name of prevention, Brussels is drafting a reform that blurs the fiscal line between traditional cigarettes and their less harmful alternatives. What at first glance appears to be a tax technicality reveals a more unsettling question: who benefits when public health dissolves into the logic of revenue?