EU Plans To Tax Cigarettes
BRUSSELS, Belgium (AP) - The European Union announced plans Thursday to slap an EU-wide tax on cigarettes in hopes that it will cut down rampant fraud and smuggling of tobacco products across the 15-nation bloc.
The European Commission said the need for a minimum tax was necessary to end the current differences in excise rates for tobacco products between member nations.
``The proposal would ensure a fair and reasonable level of taxation of all tobacco products,'' said Frits Bolkestein, the EU's taxation commissioner, adding that the proposal would ``help to tackle fraud and smuggling.''
The plan calls for a minimum duty of $1.27 to be charged on each pack of cigarettes on top of all other national duties charged. Other tobacco products will also come under a minimum rate.
The EU said its proposals would bring up the tax on tobacco products in all member nations up to a minimum level to end the large price differences which have resulted in increased smuggling within the EU's single market.
Five EU countries, Spain, Portugal, Greece, Italy and Luxembourg currently have lower duties on cigarettes than the proposed EU minimum rate.
Tobacco manufacturer's reacted negatively to the proposal, arguing the plans would force countries to hike the prices of tobacco products increasing the potential for cross-border smuggling from Eastern European countries who are not in the EU, where tobacco products are sold much cheaper.
These latest proposals are follow a line of recent moves to beef up restrictions on tobacco products in Europe, in order to stop revenue losses and improve health protection.
That draft EU law - which still needs approval from the European Parliament and national governments - would also force tobacco makers to cut tar and nicotine in cigarettes.