A European Union proposal to raise tobacco taxes has been scaled back amid opposition from several member states, a draft obtained by The Examination shows.

The EU currently sets a minimum tax rate of 1.80 euros per pack of 20 cigarettes — but has no minimum rates for newer products. Some countries, like Ireland, France and the Netherlands, impose significant taxes on top of that minimum, while others, like Bulgaria, Croatia and Cyprus, do not. 

In July, the EU Commission recommended raising minimum cigarette taxes from the current rate of 1.80 euros per pack to 4.30 euros and establishing new ones for e-cigarette liquids and heated tobacco products like IQOS, which heats tobacco sticks rather than burning them. The cigarette tax rate was last raised in 2011 and went into effect in 2014.

That proposal is now being revised by the EU Council, a legislative body composed of all 27 member states that must unanimously approve the final language. Denmark, which last held the rotating council presidency responsible for leading negotiations and writing drafts, wrote an updated draft in November.

The presidency has since rotated to Cyprus, where news reports say kiosk owners argue that 50% of their revenues come from tobacco sales. Under the latest draft, obtained by The Examination, the new rate would be 4 euros — lower than previously proposed by the EU Commission and the Danish presidency. “Most delegations express the concern that the proposed rates are significantly higher than the current rates applied for cigarettes,” the Cyprus presidency wrote in its revised draft.

The World Health Organization describes taxation as the “single most effective measure” for reducing tobacco use.

The Cyprus draft also recommended giving countries four years to introduce the higher minimum cigarette taxes, rather than requiring them to be implemented as soon as the directive is adopted. 

Recommended minimum taxes on heated tobacco sticks and e-cigarette liquids were also lowered compared to earlier proposals, though all drafts suggested giving countries four years to introduce these rates. For example, the Cyprus draft recommended a rate of 2 euros per pack of 20 heated tobacco sticks, lower than the 2.16 euros proposed by the EU Commission and the Danish presidency.

The Cyprus draft also halved the recommended rate on high-concentration e-cigarette liquids, proposing a rate of 20% of a product’s retail price versus the 40% recommended in earlier proposals.

The effort to raise tobacco taxes is part of the EU’s broader effort to reduce tobacco-related deaths, which claim more than 700,000 lives annually across the bloc.

Public health experts have criticized the decision to lower the rates proposed by the Commission and the Danish presidency.

“When taxes are weaker, consumption stays higher, addiction lasts longer, and more people develop serious disease,” said Debra Montague, president of the nonprofit patient group Lung Cancer Europe. “That ultimately means more preventable illness and more deaths.”

A spokesperson for the Cyprus presidency said its draft was an “effort to bridge diverging views amongst member states” and that it has “worked hard to enable discussions to move forward with the aim of achieving consensus.” A revised proposal will be presented in the coming weeks, the spokesperson added.

A spokesperson for the EU Commission said the Commission does not comment on leaks. (The Cyprus proposal is not a public document.)

The tobacco industry has consistently argued against the EU Commission’s proposed cigarette tax rate, and it has called for heated tobacco and nicotine products to be taxed at lower rates than cigarettes, arguing that these new products are less harmful. Nathalie Darge, director general of the industry group Tobacco Europe, said she was concerned that the Commission proposal “risks being disproportionate and could undermine legitimate markets while fuelling illicit trade.”

The proposals by the Cyprus and Danish presidencies are working documents that were drafted, in part, with input from other member state delegations. If the directive were to be adopted in 2027, it would go into effect in January 2028.

“When a tax reform designed to reduce consumption is applauded by the industry whose profits depend on affordability and product-switching, it is clear that public-health ambition is being diluted in the pursuit of unanimity and speed,” said Erin Roman, director of Smoke Free Partnership, a coalition of 57 European non-governmental groups focused on tobacco policy and anti-tobacco advocacy. 

“The outcome closely mirrors long-standing industry preferences: lower minimum rates, flexible tax structures, extended transitional periods and weakened equalisation,” she said.

Further revisions are expected. The Council’s presidency changes every six months. Ireland, which takes over this July, has the highest tobacco tax rates in the EU and is expected to push for higher rates than Cyprus. Greece, which has a sizable tobacco industry, will lead the Council in the second half of 2027, when many expect the directive to be finalized.

The EU Commission and Danish presidency drafts also proposed eventually setting the same rate for all tobacco categories, so that products like heated tobacco sticks would be taxed the same as cigarettes, as the World Health Organization recommends. The Cyprus presidency’s draft eliminates that language.

Cyprus has one of the lowest tobacco tax rates in the EU. In the fall, the country’s kiosk owners, who sell tobacco and nicotine products, sent a letter to its Parliament, urging politicians to seek an exemption for the country on the directive. According to news reports, Cyprus Employers and Industrialists Federation said the tax increase could cause many kiosks and small businesses to shut down; kiosk associations argued that hiking tobacco taxes will lead to an increase in illicit cigarettes and decrease their revenue. The tobacco industry has made the same argument when fighting higher taxes.

It’s “not that surprising” that a country with low tobacco tax rates would propose lower rates across the bloc, said Rob Branston, a business economist at the University of Bath who is also co-director of the Tobacco Control Research Group.

He praised the move to include heated tobacco and nicotine products in the directive for the first time. “Member states would be obliged to tax these products, and that would mean higher prices. And higher prices is good because it means they're harder for consumers to purchase, and therefore less likely to be purchased.”

The University of Bath has received support from Bloomberg Philanthropies, which also provides financial support to The Examination. The Examination operates independently and is solely responsible for its content.