ANALYSIS: The Swedish general election is over, and intensive negotiations are under way in Stockholm to form a new government. In the meantime, the country is being run by a caretaker government. But what does this parliamentary vacuum mean for the EU’s planned tax hike on nicotine pouches and e-liquids?
Over the past year, the negotiations on the EU’s new Tobacco Taxation Directive (TED) have been a running saga for anyone who uses snus or vejp. As is well known, the European Commission wants to introduce sky-high common minimum taxes across the entire Union. For loose snus (nicotine pouches), proposals have been as high as 143 euros per kilo – an extreme increase compared with the Swedish tax rate, which currently stands at around 23 euros. E-liquids are also under threat from new EU-wide minimum taxes.
Sweden has so far been by far the strongest opponent in the Council of Ministers and has consistently blocked the proposal. As tax matters require unanimous agreement within the EU, the Swedish Minister for Finance effectively has a strong veto.
But what is happening with that veto right now, when we don’t have a full government in place?
What is TED?
The Tobacco Tax Directive, or TED (Tobacco Excise Directive), it is EU legislation that sets the minimum taxes on tobacco within the Union. The current directive is outdated and does not cover modern alternatives such as nicotine pouches or e-liquids for vaping. The European Commission therefore wishes to update the Tobacco Products Directive (TPD) to compel all Member States to impose heavy taxes on these new products, with the aim of both reducing consumption and raising funds for the EU’s common budget. However, for the directive to become law, all EU countries must vote in favour.
The EU has postponed the decision until November
The Irish Presidency of the EU had originally aimed to push through a political agreement at the meeting of finance ministers (Ecofin) on 9 October. However, the Swedish election result and the ongoing process of forming a government have caused Brussels to reconsider.
According to information provided to Politico, the EU has now postponed the decisive meeting until November. The reason is simply to give Sweden time to form a full government and appoint a permanent Chancellor of the Exchequer.
How the transitional government in Brussels works
According to democratic practice, a Swedish caretaker government does not have the political mandate to take major, visionary decisions or to enter into compromises that would bind the next government. Signing up to new EU taxes – or giving in and accepting a compromise that raises the tax on Swedish snus – is out of the question for a caretaker government.
Meanwhile, the EU machinery does not grind to a halt. Officials at Sweden’s Permanent Representation to the EU continue to attend preparatory meetings in the Council’s working groups. But their instructions are crystal clear: the Swedish position remains unchanged until a new government may decide otherwise. This means that the officials continue to resist and block the proposals.
The Riksdag’s new EU Committee is in charge
If the process of forming a government in Stockholm drags on and we are still without a full government in November, an interesting situation will arise.
In that case, the ministers of the caretaker government must step down The Riksdag’s new EU Committee in order to secure its negotiating mandate ahead of the EU summit. As the EU Committee directly reflects the new distribution of seats in the Riksdag, it is the new parliamentary majority that dictates the terms.
Swedish consensus on nicotine taxes
Given that there is very broad parliamentary consensus in Sweden on protecting smoke-free nicotine and upholding the principle that the EU should not dictate our tax policies, the risk of Sweden wavering in Brussels is minimal. Regardless of how the government coalition puzzle ultimately falls into place in Stockholm, all the signs suggest that the Swedish veto against the European Commission’s nicotine tax will remain intact.
Analysis: Stefan Mathisson, editor and reporter
Find out more about the EU’s nicotine tax on Vejpkollen:
- Previous reports: The EU postpones decision on nicotine taxes – Read more about the reports showing how the EU machinery is waiting for the new Swedish government to take office.
- Background on the resistance: Sweden blocks EU nicotine taxes – e-liquids are also affected – That’s how it happened when the Ministry of Finance put the brakes on in early summer.
- Calculator: Calculate the EU tax on your nicotine – See how much more expensive your nicotine pouches and e-liquids are likely to become if the proposal is passed.
- Political manoeuvring: The Swedish election could decide the battle over EU nicotine taxes – A closer look at the political parties’ positions on the directive.
Other important sources and bodies:
- Sweden’s voice in Brussels: Sweden’s Permanent Representation to the EU – Monitor the day-to-day work carried out by Swedish officials during the transition period.
- The work of the EU Committee: The Riksdag’s EU Committee – Here you can follow how the newly elected Riksdag scrutinises and grants a mandate to ministers ahead of meetings of the Council of Ministers.
