EMPLOYMENT, SOCIAL POLICY, HEALTH AND CONSUMER AFFAIRS COUNCIL MEETING ON 16 AND 17 DECEMBER 2008

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Tekst

­ Information from the Commission (Other business item)

Delegations will find in the Annex an information note from the Commission on the above

mentioned subject.

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ANNEX

Tobacco Taxation and Health Information from the Commission

Tobacco taxation as a tool for health policy

Smoking is still the biggest single form of avoidable death in the Community and one of the

leading causes of illness and mortality in the EU. Tobacco taxation is part of an overall strategy of

prevention and dissuasion of tobacco consumption.

Price and tax measures are recognised as one of the most effective instruments to reduce tobacco

consumption. Substantial scientific evidence shows that higher cigarette prices result in lower

overall cigarette consumption. Some studies indicate that a 10% increase price will reduce overall

consumption by 4% to 8%.

The impact of higher prices is likely to be greatest on young people, who are more responsive to

price rises than older people. Protecting teenagers and young people constitutes one of the strongest

arguments favouring increased taxation of tobacco products.

Equally important, higher taxes would reduce the demand for tobacco most sharply in low- and

middle-income population groups or countries where smokers are more responsive to price

increases, contributing to the fight against health inequalities.

Increases in tobacco final prices is the most single effective policy tool to prevent smoking

initiation especially among young people, encourage smoking cessation, reduce the number of ex-

smokers who resume the habit, and reduce the average cigarette consumption among continuing

smokers.

Even with a reduction in demand, governments' revenues need not be harmed; higher taxes may

bring higher revenues in the short to medium term.

Raising tobacco taxes is consistently recommended at international level when developing tobacco

control policies by World Bank, WHO Europe, WHO-Framework Convention on Tobacco Control,

etc.

The Commission proposal for a Council Directive amending Directives 92/79/EEC, 92/80/EEC

and 95/59/EC on the structure and rates of excise duty applied on manufactured tobacco

(COM(2008) 459/2)

The Commission adopted on 16 July 2008 a Report and a proposal for a Directive to amend the

current EU excise duty legislation on tobacco.

The proposal for a Directive has as one of its objectives, among others, the aim to ensure a high

level of human health protection in the definition of the Community policies.

The adopted proposal will contribute to tobacco control in several ways:

  • - 
    It will increase taxes on cigarettes and reduce cigarette consumption; the proposal aims to contribute to a 10% reduction in cigarette consumption over the coming 5 years;
  • - 
    It will make it easier for Member States to ensure a minimum price level for cigarettes and to tackle in particular the very cheap cigarettes on the markets;
  • - 
    It will also increase taxes on other tobacco products which can be substitutes for cigarettes; in this way it avoids substitution of cigarettes by other products which are equally harmful for

health;

  • - 
    It will decrease the gap between the cheapest and most expensive cigarettes in the EU and simultaneously reduce the gap at regional level taking into account the geographical spread of

the enlarged EU.

The proposal adopted by the Commission has been sent to the Council, to the European Parliament,

and to the European Economic and Social Committee.

In the Council it is currently being discussed in the Working Party on Tax Questions. Subject to the

course of the discussions, its final adoption could be expected towards the end of 2009.

The Commission calls for the Health Authorities to get involved in the discussions on the presented

proposal for a Directive at a national level.

Encl: Annex I to the ANNEX: Main elements of the Commission Proposal for a Directive amending Directives

92/79/EEC, 92/80/EEC and 95/59/EC on the structure and rates of excise duty applied on manufactured tobacco

Annex II to the ANNEX: Price (in per20 cigarettes) of the most popular price category (MPPC) brand and total tax yield (excise + VAT) on MPPC July 2008 (EUR/000)

Annex I

MAIN ELEMENTS OF THE COMMISSION PROPOSAL FOR A DIRECTIVE amending

Directives 92/79/EEC, 92/80/EEC and 95/59/EC on the structure and rates of excise duty

applied on manufactured tobacco

Current legislation Proposed changes

The excise duties levied on cigarettes must The MPPC (the most popular price category) is

include a proportional component, calculated on replaced as a reference point for EU minimum

the basis of the retail selling price of the most requirements by weighted average prices (WAP). popular price category (MPPC), and a specific

In order to underscore health objectives it is

component, levied on each unit of the product.

combined with a monetary minimum applicable to

all cigarettes.

The excise duties levied on cigarettes must From a health perspective an increase in the

account for at least 57% of the retail selling minimum duties over the next five years to 63% on price, inclusive of all taxes, and be at least 64 WAP and 90 on all cigarettes would trigger a per 1000 cigarettes for the cigarettes belonging probable decrease of demand of 10%. to the most popular price category (MPPC).

The specific component of excise duty must not The specific component of excise duty must not represent less than 10% or more than 75% of the amount of the total tax burden on cigarettes represent less than 5% or more than 55% of

the amount of the total tax burden on cigarettes

falling in the MPPC.

Member States may levy a minimum excise tax Removal of the limitation on minimum excise tax

but this may not be more than 100% of the total to increase the flexibility for Member States to excise on the MPPC. optionally levy minimum excise duties.

The current level of taxation of fine-cut tobacco A partial (up to two thirds) alignment of the

is fixed at 36% of the selling retail price or 32 minimum rate for fine-cut tobacco to the minimum per kilogram excise for cigarettes and a compulsory monetary minimum as for cigarettes are proposed.

The minimum rates would therefore increase by

2014 to 60 and 42%, in line with the proposed

increases on cigarettes.

Annex II

Price (in per20 cigarettes) of the most popular price category (MPPC) brand

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