Greece is proposing to find common ground on the European Commission’s new proposal for a large increase in taxes on cigarettes, tobacco products and nicotine products in order to avoid further growth in smuggling and prevent the Greek tobacco industry from being affected.
Speaking at the ECOFIN Council of the European Union’s finance ministers, Greece’s Economy and Finance Minister Kyriakos Pierrakakis recommended, among other things, lower taxes than those proposed, a longer transition period, and the imposition of taxes based on weight and not on the unit of the final product. The European Commission is proposing a 258% tax increase on roll-your-own tobacco, a 139% increase on cigarettes, and higher taxes on electronic cigarettes and heated tobacco products, which are currently taxed much lower.
The initiative concerns the revision of the Tobacco Taxation Directive and the simultaneous introduction of a new tax (Tobacco Excise Duty Own Resource – TEDOR). It was launched after pressure from mainly Northern European countries, and Taxation Commissioner Wopke Hoekstra recently said he hoped the EU would adopt it by the summer.
Led by the Netherlands, 16 countries submitted an intervention to the European Commission a few months ago, noting that the different national tax rates distort the single market. Many countries are also calling for the directive, which dates back to 2011, to be updated to include new products that, they say, are particularly popular with children and young people. Italy, Greece and Romania, however, appear cautious.
In his intervention at ECOFIN, Pierrakakis welcomed the initiative in principle and said that based on the Greek experience, “and, taking into account our geographical location, it has been observed in the past that the increase in these tax rates leads to an increase in smuggling.”