The Commission is rewriting rules that touch jobs, public health and fiscal revenues across the bloc. A key EU advisory body is now making the same fiscal pragmatism argument economists have been arguing for years: tax the risk, not the product.
Europe’s tobacco taxation framework is being reformed for the first time in over a decade, and the stakes are higher than the technical language of excise directives might suggest. Done well, the revision modernises a law that has not kept pace with the market. Done badly, it pushes consumers toward the black market, hollows out legitimate industry and costs member states the revenue they were trying to protect.
The Commission’s proposal seeks to extend the directive’s scope to cover newer products such as heated tobacco, e-cigarettes and nicotine pouches, raise EU-wide minimum excise rates, and strengthen controls on raw tobacco to combat illicit trade. Council unanimity is required for the directive to pass.
The European Economic and Social Committee (EESC), the EU’s official advisory body representing civil society, employers and workers, adopted a formal opinion on 18 February that sets out what a pragmatic approach should look like. The EESC’s position is broadly supportive of the reform’s direction but strikes a note of caution on execution. Together with the prevention of excessive tax increases, the principle of risk-proportionate taxation is at the heart of the committee’s recommendations.
This is the idea that products posing lower health risks (vapes, nicotine pouches and heated tobacco) than combustible cigarettes should not be taxed at equivalent rates. The committee aligned its stance with what it describes as a “less harm, less tax” principle and the objectives of Europe’s Beating Cancer Plan.
The EESC opinion was particularly pointed at the risk of over-taxation. It cautioned explicitly against abrupt or excessive increases in excise duties, warning these could fuel illicit trade, undermine fiscal revenues and paradoxically weaken public health outcomes.
The concern is not without precedent: in member states where excise taxes are especially high, the share of illicit tobacco consumption rises sharply. In France, it is estimated that illicit cigarettes accounted for close to 40% of overall consumption in 2024.
On product definitions, the EESC called for improved legal clarity and harmonisation of categories across member states in particular explicitly defining heated tobacco products and clearly distinguishing them from combustibles to support effective enforcement and prevent illicit trade. They warned as the representatives of EU civil society and works that inconsistent national definitions have created varying tax regimes and administrative difficulties for regulators and businesses alike.
The EESC stressed that the Commission’s use of delegated acts should be strictly confined to technical inflation adjustments, in line with the principles of subsidiarity and member state fiscal sovereignty.
Beyond the mechanics of taxation, the EESC raised the question of employment. The opinion calls for a comprehensive mapping of existing jobs and skills within the tobacco sector alongside medium- and long-term impact assessments. This would be vast from tobacco growing in Poland, to heated tobacco factories in Italy, to vape software technology in Portugal: a clear signal from the committee that it views the reform as a structural economic issue, not purely a public health one.
Negotiations in the Council are ongoing. A first compromise text was circulated under the Danish Presidency in December 2025 and industry experts are predicting it will be decided before the end of Cyprus presidency this June.
With unanimity required, the EESC’s opinion representing employers, workers and civil society adds institutional weight to calls for a reform that is gradual, evidence-based and alert to the unintended consequences of blunt tax design.
