Brussels reviews excise duty hike impact on tobacco demand.
THE EUROPEAN Commission has given a clear indication establishing
minimum specific excise duties on cigarettes could help depress demand
for tobacco products, rather than sticking with rates, defined as a
percentage of a product price. Its views come in a detailed consultation
paper on tobacco excise duty policy--responses requested by June 1.
Brussels has been particularly alarmed by the growth in cheap cigarettes
sales, reducing excise duty revenue, while frustrating EU health
policies designed to reduce smoking. In its paper, it notes increasing
excise taxation "may reduce tobacco consumption either by
increasing the overall level of taxation and consequently the retail
selling prices, or by imposing minimum taxes or more specific duties ...
to tackle cheaper ... cigarettes." Indeed, "from a health
perspective", Brussels said a "sufficient specific duty could
be guaranteed", either with a flat rate minimum duty or raising the
current minimum 5% proportion of overall taxes that must be commanded by