The idea is unprecedented: tax according to the standard of living of a country’s inhabitants. The European Commission, which has been stalling on a review of tobacco taxation for the past three years, is considering three options, including à la carte taxation that would result in an increase of up to 139% for cigarettes, 258% for roll-your-own tobacco and almost 1,100% for cigars/cigarillos. According to the projections, the grand duchy could see the price of a packet of cigarettes rise by €3.50, or 60%--a much greater impact than in other member states. The minimum tax would be around 14% higher than in Germany, 21% higher than in Spain and 37% higher than in Bulgaria, Heintz van Landewyck calculated in a statement.
The Luxembourg company also warns of the risk of market concentration. According to the family-run company, “each European directive on tobacco has encouraged market consolidation, pushing intermediate and family-run companies like ours further out of the market.” The current reform would only accentuate this trend, by putting pressure on the margins of independent producers to the benefit of the major transnational groups.
The company also cites the latest KPMG study, which found that almost 40% of cigarettes consumed in France in 2024 were illegal, and more than 300 clandestine factories have been dismantled across Europe in the last three years. “It is not a drastic price increase in Luxembourg that will solve the problems of illicit trafficking in Europe,” insists van Landewyck.
A project supported by Luxembourg
Despite this criticism, the reform has the backing of the Luxembourg government. In a joint letter sent to the European Commission on 21 March 2025, the health minister Martine Deprez associated herself with the Dutch initiative, which called for the revision of the EDP Directive to be “sped up.” The letter, co-signed by some 15 European health ministers, stresses that taxation is “the most effective tool for preventing initiation of smoking, particularly among young people,” and points to a potential of 536,533 deaths avoided in the EU over four years, according to economic modelling. According to European Commission estimates, the most ambitious scenario could bring in €15.1bn a year in additional tax revenue while reducing smoking prevalence, insists the eureporter website for its part.
This position is in line with the objectives of the European Cancer Plan, which aims to reduce smoking prevalence to below 5% by 2040.
While some countries, such as Sweden, favour differentiated taxation depending on the harmfulness of the products (taxing alternatives such as snus or electronic cigarettes less), the Brussels draft plans to harmonise the taxation of these alternative products. According to some experts, this could discourage smokers from switching to less harmful products, thereby reducing the public health benefits.
This article was originally published in French.
