In its proposal for the 2028-2034 budgetary framework, the Commission plans to raise around 2,000 billion euros, the majority of which would still come from national contributions. But an increasing part should now come from new “own resources” collected directly to the EU scale. Among these, tobacco is in good place.
The taxation of tobacco would bring back 11.2 billion euros per year, or almost 20 % of the 58.3 billion euros in own resources that the EU plans to receive each year. To put this in perspective, the first figure represents the annual amount received by Italy in 2023.
Over seven years, this represents 78.4 billion euros, that is enough to finance a large part of the defense expenses provided by the Union.
A uniform sampling mechanism
Concretely, the Commission proposes that 15 % of tax revenue related to tobacco collected by each Member State are paid directly into the European budget. A fixed rate, whatever the level of national taxes. Thus, contributions will vary according to the country: France, for example, strongly taxes tobacco, while Bulgaria applies much lower rates.
The tax would be taken regardless of the level of national taxes on tobacco.
It is important to note that this tax of 15 %, called “own resource from the accusation duties on tobacco” (Tedor), is not linked to the current revision of the Tobacco Taxation Directive (DTT), which the Commission proposed Thursday, July 17 and which will soon be the subject of separate negotiations.
Presented on July 17, the revision of the DTT aims to considerably increase tobacco taxation rates throughout the EU. It suggests a 139 % increase on cigarettes, 258 % on rolling tobacco and, for the first time, high taxes on new products such as electronic cigarettes, heated tobacco and nicotine sachets.
Previously, commission sources in Brussels had mentioned the possibility of using the additional revenue generated by the DTT revision to finance the EU budget. But this project was abandoned, the 2028-2034 budget proposal introducing Tedor as an autonomous clean resource based on tobacco.
However, if the revision of the DTT is adopted, it would indirectly increase the EU revenues. Thus, even if the rate of 15 % remains unchanged, the EU budget would increase in parallel with national tax revenue.
Concretely, as part of the current DTT or its revised version, the Member States will always be required to contribute to 15 % of their total tax revenue on tobacco. This even applies to countries like France, which already imposes taxes on tobacco superior to the current EU average, which means that the new tax increases provided for in the revision of the DTT will not affect current levels.
Illicit trade
One of the main challenges related to the perception of the 15 % tax will be to combat the growth of black markets.
Brussels, echoing the World Health Organization (WHO), rejects the affirmations that an increase in taxes would result in an increase in illicit trade. European officials say, on the contrary, that it is the absence of tax convergence within the Union which feeds illegal trade in tobacco.
However, recognizing this risk, the Commission proposed a lower tax rate for hookah tobacco (Shisha), whose black market has developed in many EU countries, in particular in Germany.
According to a Europol report of 2025, countries where the rates of excise and VAT are high are more vulnerable to the illicit sale of products subject to excise.
What if the objective of a “tobacco -free” generation materialized?
The argument according to which an increase in tobacco taxes would result in an upsurge in the black market is one of the arguments often put forward by the tobacco industry.
However, the credibility of this argument is limited. Antitabac groups see an attempt to undermine public health efforts. And this refers to the history of industry.
In the 1980s, tobacco manufacturers marketed filter and “light” cigarettes by presenting them as “less harmful”, an affirmation today largely refuted. Health organizations claim that the same error is reproducing today, the industry praising the merits of electronic cigarettes and other alternatives as being “less harmful”.
The Association of European Leagues against Cancer welcomed the proposal to increase the taxes of the Commission, describing it as a step towards the creation of a tobacco -free generation.
However, this raises a practical question: what will happen if the increase in taxes is crowned with success and people stop smoking completely? Would that dig a hole in the EU budget?
The commission responds in the negative. It argues that the 11.2 billion euros in expected annual revenue already take into account a drop in tobacco consumption over time.
In addition, the EU estimates that EU countries would save an additional € 6 billion per year in tobacco health costs.