Hermes–European Study Centre expresses its strong support for the compromise text developed by the Cypriot Presidency of the Council of the European Union on the revision of Directive 2011/64/EU, the Tobacco Excise Directive (TED). Hermes considers this a strong, balanced, and sustainable basis for a strategic reform at the European level.
A new Hermes–European Study Centre position paper (https://www.hermescse.eu/hermes-european-study-centre-supports-cyprus-compromise-on-tobacco-excise-revision/) highlights how the European Commission’s original 2025 proposal, although driven by commendable public health objectives, contained significant critical issues, particularly due to its centralized approach and extremely rapid and substantial tax increases across several product categories.
By contrast, the Cypriot Presidency’s compromise represents a pragmatic and consensus-oriented response among member states, capable of reconciling European harmonization with economic sustainability. Key features include more gradual tax increases, extended transitional periods, a cap on automatic inflation-linked adjustments, and clearer differentiation among nicotine-containing product categories.
“The Cypriot Presidency’s compromise represents a necessary balance between different needs, avoiding ideological approaches and prioritising a practical and sustainable vision of European fiscal policy,” stated Giovanni Kessler (pictured), chairman of the Scientific Committee of Hermes – former Director of the European Anti-Fraud Office (OLAF) and Italy’s Customs and Monopolies Agency (ADM). “It demonstrates that Europe can adopt effective solutions without compromising economic stability and social cohesion.”
“This text introduces fundamental elements of predictability and gradualism, essential to ensuring a stable and investment-friendly regulatory environment,” added Giuseppe Tanga, Director of Hermes–European Study Centre. “A balanced approach makes it possible not only to pursue public health objectives, but also to protect production chains and reduce the risk of market distortions, including illegal activities.”
Hermes emphasises that excessively abrupt fiscal measures risk producing distortive effects on the real economy, impacting demand, production chains, and employment. Although regulated, the tobacco sector continues to represent a significant component of many European economies.
Particular attention is also given to the strategic role of tax revenues, which can help support common European Union priorities, such as strengthening defence capacity and strategic autonomy, through more stable and predictable resources over time.
Hermes–European Study Centre hopes that member states will recognize the value of this balance and translate it into a concrete and lasting agreement.
