87 industry organisations, manufacturers and retailers are raising the alarm about the European Commission's planned tax increases on cigarettes and smokeless nicotine products. The sector warns of job and fiscal collapse - and says public health could suffer.
87 industry organisations, manufacturers and retailers are now openly protesting the European Commission's upcoming proposal to substantially increase taxes on cigarettes - and perhaps above all on new smokeless nicotine products. An open letter to the Commission and the finance ministers of 27 countries sets out in detail what they fear will be the consequences if the Commission does not reverse its current approach.
“The proposal will have dramatic economic, social and public health consequences. Paradoxically, it will also undermine the EU's own health objectives by making these smoke-free products prohibitively expensive,” says Bengt Hedlund, CEO of the trade organisation Convenience Stores Sweden, one of the organisations that signed the letter.
Substantial increases planned
According to the 87 organisations, the European Commission's planned tax increases 140 % on cigarettes and 260 % on fine-cut tobacco. During the autumn, it has also emerged that the biggest increases are planned for smoke-free products such as e-cigarettes, heat-not-burn and nicotine portions where taxes are more than doubled on certain products.
“Smoke-free products pose significantly lower risks compared to traditional cigarettes and combustible tobacco. They will not be taxed as heavily. This proposal will have dramatic economic, social and public health consequences,” says Bengt Hedlund.
Jobs and tax revenues under threat
The organisations point out that the proposal also threatens jobs and tax revenues:
“The sector contributes with EUR 224 billion to GDP in the EU-27, representing 1.3% of the total economy - more than the telecoms and textile industries combined. If the sector were a separate EU country, it would be the 17th largest economy, located between Greece and Hungary. The sale generates 112.9 billion in VAT and excise duties, more than half of the EU's total defence spending,” the 87 organisations write.
Nicotine products create jobs
According to the organisations, the nicotine products sector employs 2.1 million people across the EU, from tobacco cultivation and processing to distribution, trade, research and development, and manufacturing of electronics for new nicotine products.
”These jobs generate 61 billion in salaries” they write.
According to them, the proposed tax increases, which have the support of the Danish and Dutch presidencies, will mainly affect low-income earners in poorer EU countries and millions of small shops.
Risk of growing black markets
The organisations also point to the risks of growing black markets combined with competition from overseas manufacturers. In countries that have banned some of the internationally available supply of e-cigarettes, the black market is already large.
“Today's fragile supply chains are constantly being challenged. If Europe is to compete with strong economies like China and the US, our sectors that create and retain value locally must be prioritised. Our sector is one of them - and the proposed policy risks weakening it considerably,” said Bengt Hedlund.
”Losing control”
Bengt Hedlund points out that France and The Netherlands has already shown that this model does not work. The illicit market for cigarettes is growing, tax revenues are lost and smoking rates remain high.
“States are losing control of tobacco use, which is a prerequisite for reducing harm” notes Bengt Hedlund.
Swedish convenience stores risk severe impact
As Vejpkollen previously reported thousands of Swedish small shops, convenience stores and petrol stations will suffer financially if taxes on nicotine products are increased.
“Nicotine products have always been important to keep shops going. A few years ago, it was mostly snus and cigarettes. Today, e-cigarettes and nicotine pouches are taking up more and more space, and with limited retail space, priority is given to what sells best - and that's smokeless products, not cigarettes,” says Bengt Hedlund.
The sector wants to engage constructively
He argues that campaigns against smoke-free products miss the mark completely, as smokers are the main target group for new products. This has implications for the future, especially in terms of reducing the harm caused by smoking, he says. Bengt Hedlund.
“Industry and trade are ready to engage constructively for a future where innovation, economic growth and competitiveness are in line with Europe's public health objectives. But these tax increases are excessive, based on ignorance and do not differentiate between traditional combustible tobacco products and smokeless products with a lower risk profile. The Commission claims that all tobacco and nicotine use is equally harmful - and this sends completely the wrong signals to smokers,” said Bengt Hedlund.
