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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 excise duties.

* resources/documents/common/consultations/tax/ consultation_paper_tobacco_en.pdf
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Author:Nuthall, Keith
Publication:International News
Date:May 1, 2007
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