The latest compromise text under the Cypriot Presidency in the revision of the EU Tobacco Taxation Directive represents a cautious but meaningful shift in the debate over nicotine pouch excise. While the proposal does not fully resolve concerns around proportionality and risk alignment, it acknowledges a central empirical reality: national taxation of nicotine pouches varies substantially across Member States, and the originally proposed €143 per kilogram minimum exceeds most existing regimes.
This recognition introduces a degree of calibration into a discussion that had risked drifting toward uniformity without regard to market maturity or national fiscal design.
Recognising the diversity of Member State practice
The Cypriot Presidency explicitly observes that Member States are far from convergence in how they tax nicotine pouches. Among the fourteen countries that currently apply excise, several tax at or below €50 per kilogram, others apply rates above €120, and a group sits between those thresholds.
This distribution matters. A harmonised minimum of €143 per kilogram would not represent incremental alignment for most countries. It would require significant and rapid policy-driven increases in a majority of jurisdictions. By acknowledging that the proposed rate is higher than most currently applied national levels, the Presidency signals an awareness that excise harmonisation must reflect existing practice rather than override it.
That acknowledgment is a constructive step. However, it does not by itself resolve the structural design of the directive.
The structural endpoint: 50 percent of retail or €143 per kilogram
The core architecture of the proposal remains a dual-trigger system. From 2030, Member States would be required to apply at least 25 percent of retail price or €71.5 per kilogram. By 2032, this floor would rise to 50 percent of retail price or €143 per kilogram, whichever is higher.
These figures function as minimums, not ceilings. Member States remain free to tax above them.
The structural issue lies in the ratio. A 50 percent of retail floor effectively positions nicotine pouches among the most heavily taxed nicotine categories in the EU framework. This design risks narrowing the price differential between lower-risk oral products and combustible tobacco, which remains the highest-risk category in the market.
Tax policy shapes incentives. If price differentiation is compressed, the economic motivation for adult smokers to switch is weakened.
Price signals and public health coherence
Excise design is not merely a fiscal matter; it is behavioural architecture. Differential taxation communicates regulatory priorities and shapes consumer decision-making.
In Member States currently applying excise at or below €50 per kilogram, compliance with a €143 floor by 2032 would require substantial and rapid increases. Such uplifts may produce unintended consequences, including cross-border distortions, uneven internal market effects, and potential growth in informal supply channels.
More fundamentally, placing nicotine pouches structurally near the top of the excise hierarchy risks creating a misalignment between fiscal design and toxicological profile. Non-combustible oral products eliminate smoke and many combustion-related toxicants. While not risk-free, they occupy a different position on the risk continuum than cigarettes.
Excise policy that does not reflect this hierarchy risks undermining broader harm-reduction objectives.
Proportionality as a governing principle
The Cypriot text reflects an emerging recognition that harmonisation should not be synonymous with maximalism. A more proportionate framework would align excise levels explicitly with relative risk, preserve meaningful price differentials between combustible and non-combustible categories, and avoid rigid percentage-of-retail formulas that escalate automatically as prices rise.
Quantity-based minimums, calibrated to risk and adjustable over time as evidence evolves, may offer a more stable and coherent design than fixed high ratios embedded into primary legislation.
The Presidency’s acknowledgment that €143 per kilogram sits above most current national practice suggests that the debate is moving toward data rather than abstraction. Whether that movement translates into structural adjustment remains to be seen.
A cautious course correction
The Cypriot proposal should be understood as a partial recalibration rather than a final settlement. It reflects responsiveness to empirical variation across Member States and introduces a degree of flexibility into the discussion. At the same time, the underlying architecture continues to position nicotine pouches at a comparatively high excise tier.
The final outcome of Council negotiations will reveal whether the European Union intends to embed harm-reduction principles within its fiscal framework in practical terms. Excise policy can either reinforce or contradict risk differentiation. The durability of proportionality in the final directive will signal which path the Union has chosen.
For now, the Presidency’s move represents a step toward nuance. The question is whether that nuance will be preserved in the final text.
