A gradual increase in minimum tax rates on cigarettes, to at least €1.50 per pack by 2014, and other tobacco products, was backed by the European Parliament in Strasbourg, but it advocated smaller increases than those proposed by the Commission.

The aim of the proposed legislation is to avoid distorting the single market and to foster tax convergence (tobacco tax rates currently differ from Member State to Member State). This should also help to protect health, if used in combination with a ban on tobacco advertising and with education campaigns, said the House, in a report drafted by Zsolt Laszlo Becsey (EPP-ED, HU).

Convergence would be fostered by applying the same minimum requirement to cigarettes and other tobacco merchandise. The increases, if approved by the Council, would be introduced gradually, ending on January 2014.

At least €1.50 per pack of cigarettes from 2014

The minimum tax on cigarettes should be €64 per 1,000 cigarettes from January 2012 onwards, agreed the committee. But from January 2014, the minimum tax should be €75 per 1,000 cigarettes, less than the €90 proposed by the Commission, it added.

This would make the minimum tax €1.50 per pack of 20 cigarettes from 2014.

New minimum rates for cigars, cigarillos and rolling tobacco

The proposal also aims to bring minimum tax rates for fine-cut rolling tobacco into line with the rate for cigarettes. For this tobacco, the committee proposes minimum tax rates of €43 per kilogramme from 2012 and €50/kg from 2014 (for the latter step, the Commission had proposed €60/kg).

For cigars and cigarillos, the Parliament advocates minimum rates of €12/kg from 2012 and €22/kg from 2014.

More time for Member States

Whereas the Commission proposed increasing the minimum rates in two steps, one from 2010 and the other from 2014, the European Parliament agreed on 2012 and 2014.

As is usual with taxation issues, Parliament's views are advisory rather than binding and the final decision is for the Council, acting unanimously.