The European Commission’s plan to hike tobacco taxes has sparked opposition from at least 12 member states, who warn the proposals could fuel illicit trade already costing Cyprus €22 million annually in lost revenue.
The proposals, discussed at the Economic and Financial Affairs Council in Luxembourg, would nearly triple minimum excise duties on cigarettes and impose levies on e-cigarettes and heated tobacco products for the first time.
Under the plan, minimum cigarette taxes would rise from 60% to 63% of the weighted average retail price and from €90 to €215 per 1,000 cigarettes. Hand-rolling tobacco would face a 62% tax rate and a minimum of €215 per kilogram.
The scheme would introduce a 45% minimum tax on next-generation products including e-cigarettes and heated tobacco from 2028, rising to €88 per 1,000 units by 2032.
If implemented, a packet of cigarettes in Cyprus would jump from €4.50-€5.00 to €7.00-€7.50. Hand-rolling tobacco would nearly double from approximately €7.00 to €13.00.
Climate and Clean Growth Commissioner Wopke Hoekstra defended the reform as essential, noting that Europe remains one of the world’s regions with the highest smoking rates.
“There are new products that deliberately target young people, even 15-year-olds, creating a new nicotine addiction,” Hoekstra said.
Italy, Bulgaria and Romania warned the tax increases could drive consumers towards illegal tobacco markets. Greece, Croatia, Luxembourg and Hungary argued the proposed rises were excessively high.
Cyprus faces mounting smuggling crisis
The tax changes threaten to worsen Cyprus’s growing illicit cigarette problem, potentially driving more consumers to purchase smuggled products from the occupied territories.
Illicit cigarette consumption in Cyprus jumped to 14.3% of total consumption in 2024, up 3.29 percentage points from 11.0% in 2023, according to recent figures.
Cypriots consumed approximately 130 million illegal cigarettes in 2024, costing public coffers €22 million in lost revenue.
Across the EU, consumption of illicit cigarettes reached 38.9 billion, with revenue losses calculated at €14.9 billion—an increase of €3.3 billion compared to 2023.
One quarter of EU citizens smoke, according to official statistics. Cyprus’s smoking rate stands at 29%, the seventh highest in Europe.
Eastern and southeastern Europe record the continent’s highest smoking rates, with Bulgaria at 37%, Greece at 36%, Croatia at 35% and Romania at 34%.
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