The price of tobacco in the European Union could rise by around 1.22 euros per pack due to a tax review proposal that is scheduled to come into force in 2027. The measure is part of a reinforcement in the sector’s taxation, with a direct impact on the final cost of the product and the way in which tax revenues will be distributed between Member States and Brussels.
According to the newspaper Correio da Manhã, the increase results from the update of the tax directive and the decision to transfer 15% of national revenue from tobacco to the European Commission. This redistribution could represent around 225 million euros per year for Brussels, taken from the amount currently retained by the Portuguese State. The same source indicates that the immediate consequence should be a reduction in consumption, as has happened in previous contexts.
A projected increase for 2027
Portugal currently has around 1.5 million smokers and more than three quarters of the price of each pack corresponds to taxes. The fiscal increase could accentuate the drop in the number of consumers, with an impact on the industrial sector. The Union of Agricultural and Food, Beverage and Tobacco Workers of Portugal warns of possible effects on employment, arguing that the public health strategy should not put job stability at risk.
The newspaper writes that Tabaqueira, located in Albarraque, employs close to 1,500 workers and provides more than 3,000 indirect jobs. The Sintra factory appears as the seventh largest national exporter, with an annual production of 25 billion cigarettes. On World Lung Cancer Day, on August 1, the Ministry of Finance expressed opposition to the community proposal.
Minimum rate of 139% under discussion
The publication adds that, if the directive moves forward, each pack could bear a minimum of 139% tax burden, in addition to the approximately 80% already existing in the sales price. The estimated final cost would rise from the current five euros to 6.22 euros, making the tax higher than the value of the product itself. In rolling tobacco, the proposal is that the increase could reach 258%.
The same source states that the European Commission intends for States to hand over 15% of tobacco tax revenue. Based on the value foreseen in the State Budget for 2026, this would represent around 250 million euros transferred annually to Brussels, an amount greater than the portion allocated to the National Health Service.
The news portal explains that TED, the European directive on tobacco tax, intends to create TEDOR, a new community tax applied to cigarettes, heated tobacco, electronic cigarettes and nicotine pouches. The objective is to progressively reduce the number of consumers and bring Europe closer to a tobacco-free reality in 2040.
The World Health Organization has encouraged restrictive policies and is discussing the topic at COP11. The proposal includes broad limitations and tax equality for several alternative products, considered less harmful but still associated with nicotine consumption. The ambition is to eliminate economic incentives and reduce adherence to the habit, despite the objection presented by Portugal.
On the economic front, the expected increase raises questions about the balance between health and tax revenue. The changes could redefine the price charged in the coming years and influence the behavior of one and a half million consumers.
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