The European Parliament on Wednesday defeated a proposal to freeze cigarette excise taxes at a 60% rate of retail value – throwing a final decision on tobacco and nicotine policies into the court of the European Council of Ministers. But the politically-divided EU Council is unlikely to raises taxes anywhere near the bar set by the WHO’s latest recommendations for taxes on cigarettes as well as novel nicotine and tobacco products that are surging in popularity.

A European Commission initiative, now set to go before the Council this summer, would raise cigarette excise taxes to 63% – still short of the WHO’s 70% benchmark.  Meanwhile excise taxes for e-cigarettes at low nicotine concentrations would be set at only 20%; at 40% for products with higher nicotine concentrations, and at 50% for nicotine pouches, according to the EC proposal. That’s in contrast to a WHO recommendation that excise taxes for all novel products be aligned with traditional cigarettes.

The requirement for unanimous European Council agreement on a tax package creates a major political hurdle for any initiative to raise cigarette to taxes and taxes on novel products further – in  alignment with WHO guidance. This, as the European Union records one of the world’s slowest declines in tobacco use.

The EU Commission initiative would also establish a stricter minimum tax floor of €215 per 1,000 cigarettes. The now-rejected European Parliament position had attempted to lower this floor to €200 per 1,000 cigarettes, while setting the proposed minimum excise tax on nicotine pouches to just 28% of the average retail selling price, a full 22% lower than the Commission’s original proposal.

EU tobacco tax misses WHO benchmark

WHO recommends that excise taxes – that is taxes specific to products like tobacco and alcohol – account for at least 70% of a product’s retail price. Total taxes, including  VAT and customs duties, should account for at least 75% of the retail price, according to the WHO recommendations.

Furthermore, the WHO has warned against differentiated taxation for novel products. Global health officials warn against creating such regulatory carve-outs, arguing that they sustain lifelong nicotine dependence.

Health advocates have meanwhile warned against revised tobacco taxes that make novel products highly affordable and easily accessible for young demographic groups.

Surging new products target youth

A recent WHO report highlights that retail sales of nicotine pouches surged past 23 billion units globally in 2024. Within the European Union, this market expansion is heavily driven by high consumption in Sweden, where novel pouches have become increasingly popular among young people.

WHO officials warn that these aggressively marketed products threaten to create an imminent youth addiction epidemic across the bloc if left unchecked. “The use of nicotine pouches is spreading rapidly, while regulation struggles to keep pace,” said Dr Vinayak Prasad, Unit Head of the Tobacco Free Initiative at the WHO, upon the release of the WHO global report.

Health advocates warn that transnational tobacco companies are actively using Sweden’s experience to pressure other EU nations into adopting equally lenient regulatory and tax frameworks.

To attract adolescent consumers, manufacturers deploy digital influencer campaigns and candy-inspired flavours. Medical experts caution that some European brands feature extreme concentrations reaching up to 150 milligrams of nicotine per gram, significantly increasing cardiovascular risks and impairing adolescent brain development.

Divided Council to decide later this year

With the EU parliament failing to find a negotiating position, the burden now falls entirely on the EU’s Council of Ministers, including ministers from all 27 EU member states, to close the tax loopholes. The EU Council must now reach a consensus before adopting the final directive. The likelihood is that a tax increase of some kind will be approved, but it will be unlikely to even meet the level of the EU Commission’s proposal.  

The Swedish government, in particular,  has been lobbying to keep tax levels low on alternative tobacco products due to its large pouch market.  Earlier this month, Sweden reportedly blocked an broad EU initiative that would have established a higher tax floor on novel products, sources told Health Policy Watch.

Nicotine Pouches: WHO Demands Strict Regulation to Prevent Looming Youth Epidemic

Image Credits: Felix Sassmannshausen/HPW.