Hermes European Study Centre welcomes the advanced stage of negotiations on the revision of the Tobacco Excise Directive (TED). The incoming Irish Presidency of the Council of the European Union receives a mature compromise, the result of intensive work that accounts for legitimate concerns raised by several member states. Ireland should embrace this momentum and finalize a deal.
The European Commission’s original proposal, which envisaged significant and indiscriminate excise increases on certain products, risked producing counterproductive effects. As Hermes has repeatedly highlighted, ill-conceived increases erode the legal market and fuel illegal trade, depriving member states of revenue while leaving public health objectives unmet.
However, the current state of negotiation is well-suited for agreement. The compromise text currently with the Council represents a significant improvement over the original proposal. It sets excise rates at levels member states can realistically support. Furthermore, future adjustments to excise rates will not be automatic but will require the involvement of the Council, thereby preserving the opportunity for member states to shape the direction of the framework.
These improvements are the result of constructive contributions from Italy and others throughout the negotiations. Hermes has consistently argued in favour of smart, balanced regulation rather than punitive measures. A regulatory framework that treats products as interchangeable misprices the market and weakens the framework’s internal coherence; the latest compromise provides a solution with that in mind.
Since the current framework was established in 2011, the market has undergone profound changes with the emergence and growth of new nicotine products. The current compromise helps close this regulatory gap by bringing these products within the Directive and taxing them according to their specific characteristics, in line with a modern, proportionate fiscal policy focused on harm reduction.
We encourage the Irish Presidency to seize this opportunity to bring progress on this file. Reopening core elements of the file or reintroducing the sweeping rate hikes of the original proposal could endanger the consensus that has been painstakingly built. Continual progress, based on the current compromise text, represents the most realistic path towards an agreement that safeguards public health, tax revenues and the integrity of legal markets alike.
Ireland, Italy and all member states should now continue to support this approach with determination. Hermes will monitor these developments closely and provide independent analysis to ensure that the revision of the TED becomes a model of sound European regulation.
This statement was issued by Giovanni Kessler, Chairman of the Scientific Committee of Hermes, and Tiziana Demma, President of Hermes European Study Centre.