The European negotiations on new tobacco taxes stop without an agreement. For those who buy cigarettes or vaping liquids, the immediate consequence is clear: no new tax increase will arise from the recently concluded Ecofin meeting on 9 November, but the postponement does not freeze prices and does not cancel the fiscal decisions taken by individual governments.
Irish Finance Minister Simon Harris, rotating president of the European Council, explained that there is an agreement on the principles of the reform, but not on the levels of taxation. The opposition from Malta and Finland prevented its conclusion. The dossier will be discussed again.
Behind the clash over rates there is a question that concerns consumers, businesses and public budgets: how much of the new levy would end up on the receipt and how much would be absorbed by producers?
Why the excise duty agreement has stopped
The most controversial issue concerns the taxation of nicotine sachets, but the negotiation concerns a broader package: the objective is to update the European minimums on traditional products and extend the harmonized system to electronic cigarettes, heated tobacco and new products containing nicotine.
On tax matters the Council decides unanimously. A broad consensus, therefore, is not enough to transform the compromise into an agreement.
Italy had expressed support for Irish mediation. Giancarlo Giorgetti had judged the balance achieved to be acceptable, asking not to further review some elements relating to product definitions and the treatment of raw tobacco.
The postponement leaves the negotiation open: it is not equivalent to the withdrawal of the reform, but it prevents the rates and negotiation calendars from being presented as approved decisions.
What changes for those who buy cigarettes and liquids
The decisive distinction is between European minimums, Italian taxes and sales prices.
The Union establishes minimum levels of taxation that states must respect, leaving them the possibility of applying higher rates. It does not set a single European package price.
Even a future increase in the EU minimum should therefore be compared with what is already collected in Italy. Only then would it be possible to evaluate any necessary adjustment and its timing.
The Italian choices on tobacco excise duties, however, follow a national path. The lack of agreement in Brussels does not cancel Italian measures already approved, nor does it prevent producers from modifying the price lists according to the established procedures.
| Point to clarify | What does the postponement mean? |
|---|---|
| New rates of the EU package | Not approved at the November 9 meeting |
| Retail prices | No automatic raises resulting from this meeting |
| Italian taxation | National regulations continue to follow their own timetable |
| Times of the reform | A new negotiation step is needed |
Who absorbs the cost: consumers or producers?
A tax increase can result in higher prices, lower margins for companies, or a combination of the two effects. The pass-on to the consumer is not necessarily identical for every brand and category.
A manufacturer can try to defend volumes by limiting price increases, giving up part of the margin. Or it can transfer the burden more to the price, accepting the risk that a portion of customers reduce purchases or choose less expensive products.
For this reason, the value of the excise duty alone does not allow us to predict the receipt. Competition, commercial strategies and demand reaction also count.
For the State, more taxes do not mean certain revenues
The revenue also depends on the quantities sold. Applying a higher levy to unchanged consumption produces a different result than a market in which purchases decrease or shift to other categories.
It is the delicate balance of tobacco taxation: discouraging consumption and, at the same time, raising revenue. To estimate the effect on Italian accounts, definitive rates, effective dates and reliable hypotheses on sales trends would be needed.
The postponement does not allow us to account for new revenues from this package, nor to attribute to Italy an already quantifiable loss of revenue. For businesses, however, the uncertainty over the fiscal framework with which to plan prices and investments prolongs.
What is missing before the new rules become operational
A future political agreement would be an important step, but it should be distinguished from the formal adoption of the texts and their entry into force. To know when the levy would actually change, it would be necessary to also read the national transposition provisions and any transitional phases.
The possible Italian deadline of 2036, circulated in the previews of the compromise, cannot be presented as an acquired extension.
The next comparison will have to resolve the remaining open point: how much to tax the different categories. Only with an agreed text will it be possible to compare the new minimums with Italian taxes and understand who will actually have to pay more.
