The EU is significantly increasing excise taxes on tobacco products: cigarette costs are projected to jump 2.5 times, impacting Ukraine as well.
The European Union intends to substantially raise the baseline excise duty on tobacco items, potentially causing a 2.4-fold surge in cigarette prices. Ukraine is anticipated to experience similar effects soon.
Tax policy specialist Vyacheslav Cherkashin highlighted this issue in a column for Focus.
The European Union is gearing up for a major transformation in its tobacco regulations. Brussels is setting in motion revisions to Directive 2011/64/EU, which governs tobacco product taxation. According to an expert, the novel EU undertaking encompasses several decisions that will boost cigarette costs, primarily in EU nations, and later in Ukraine.
The most notable alteration will be an increase in the base excise duty for cigarettes—from €90 to €215 per 1,000 cigarettes. This signifies a 139% surge. In 22 of the 27 EU nations, this will result in a substantial escalation in retail prices—by €1–2 per pack. Only five nations—Belgium, France, Finland, the Netherlands, and Ireland—already maintain tax rates exceeding the proposed minimum.
The directive will also be pertinent to so-called “new innovative products”: e-cigarettes, heated tobacco items, nicotine pouches, etc. These too will be governed by fresh minimum taxes. Nevertheless, Swedish snus will stay outside the document's purview.
Another key modification involves the incorporation of raw tobacco into the electronic system designed for monitoring the flow of excisable items within the EU.
The European Commission forecasts that the revamped system will yield roughly €15 billion in extra yearly income for member states. Savings in healthcare costs of approximately €6 billion annually are also projected.
For Ukraine, these developments point to a marked acceleration in the rate of tobacco excise duty increments. Presently, the nation is slated to achieve the former baseline EU standards solely by 2028 (as per Law No. 4115). Should the EU enact fresh regulations imminently, Ukraine will have to adjust its policies more rapidly. This is thought to trigger another jump in cigarette prices between 2026 and 2028 and may encourage the illicit market.
