The fourth issue of the Spotlight on the FCTC focuses on the European Commission proposals to amend EU Directives on the rates and structure of taxes on manufactured cigarettes.

In July 2008 the European Commission published a proposal updating current EU rules on the taxation of tobacco products. In this edition of Spotlight, the SFP aims to explain the background to the proposals, the legislative procedure that will be followed at EU level and, most importantly, why tobacco taxation is one of the most effective and efficient methods to reduce smoking rates.

Smoking is still the biggest cause of preventable death in the EU, with 650,000 smoking-related deaths each year. The World Bank argues that, on economic grounds alone, tobacco should be controlled, and estimates that, when all costs of tobacco around the world are subtracted from all benefits, the net result is a global economic loss of US$200 billion each year. Furthermore, the cost to the EU of tobacco-related disease is estimated at €100 billion – 1% of the EU’s GDP, a sum almost equivalent to the entire EU budget.

Tobacco taxes are successful in reducing smoking levels as they:

• Motivate smokers to quit and young people not to start using tobacco
• Reduce the impact of second-hand smoke on non-smokers
• Are effective immediately
• Impose only minimum cost on the government
• Increase government revenue
• Reduce health inequalities as they particularly motivate poorer socio-economic groups to quit or smoke less

Source: Howard Barnum, The economic burden of the global trade in tobacco, Tobacco control, 1994; European Commission, Tobacco or Health in the European Union: Past, Present and Future, Luxembourg, 2004