Will the EU take a leaf out of its climate change legislation to inform tobacco policy?

Will the EU take a leaf out of its climate change legislation to inform tobacco policy?

The European Commission has released its hotly anticipated ‘Fit for 55’ package under the European Green Deal. The sweeping plan contains measures to reduce net greenhouse gas emissions by 55% before 2030 using a two-pronged strategy. The proposal involves employing economic levers to redirect the bloc’s course towards carbon neutrality: on the one hand, raising prices for carbon intensive energies and on the other, lowering or subsidising costs for more sustainable solutions.

This use of the tax powers at the EU’s disposal to shape public behaviour towards the collective good builds off the solid blueprint of the Tobacco Tax Directive. Since 2011, Europe-wide ‘sin taxes’ on cigarettes have been a powerful means to bring about behavioural change without outright bans on tobacco products. As they zero in on carbon neutrality, the EU has carried over the same tactic into their climate plan to encourage the transition away from carbon-intensive activities and energy sources.

But while Brussels is happy to offer climate subsidies as a sweetener for European consumers and industries, the EU is now ironically moving in the opposite direction when it comes to smoking, sidelining less harmful alternatives for those trying to wean off cigarettes. 

Taxed for the privilege of burning carbon and lighting cigarettes

The EU is leading the global pack when it comes to the “generation’s defining task” of rapidly reducing emissions. In recognition of the fact that carbon neutrality cannot happen overnight, the bloc’s plan of action on carbon reduction contains a calculated balance of policies. At the heart of the package is a drive to increase the cost of greenhouse gas emissions where lower-emissions alternatives exist, including a border tax for high-carbon products from abroad, taxes for high-carbon aviation and shipping fuel, and tariffs on certain imports from countries with lax climate-protection rules.

The experience of bloc-wide excise taxes on traditional cigarettes have amply demonstrated the efficacy of this type of tax policy. Similarly to the EU’s new green directives, which impose a price on those choosing carbon-heavy energy sources, tobacco taxes aim to tackle the dire health problems caused by tobacco by levying duties on the quarter of Europeans who continue to smoke.

The tobacco tax directive requires Member States to add at least 60% of tax to the weighted average retail selling price of a pack of cigarettes (before VAT). According to an EU evaluation of the Tobacco Tax Directive released last year, the average excise taxes collected per thousand cigarettes across the bloc rose from €113 to €148.5 between 2010 and 2017, an increase of over 31% that helped excise tax receipts reach a combined €82 billion EU-wide by 2016. While the Directive did not achieve the bloc’s stated goal of reducing smoking rates by 10% over five years, the reduction it did achieve in its first few years of implementation was nonetheless equivalent to seven million fewer smokers.

Keeping an open mind towards alternative solutions

With ‘Fit for 55’, the EU is going one step beyond the dissuasive template of the Tobacco Tax Directive by openly pushing Europeans towards alternative solutions with lower carbon footprints.

To the extent Europe’s climate measures represent a sea change for the bloc, the phase-out of new petrol and diesel cars by 2035 is perhaps the biggest proposed adjustment. As a counterweight to their new policies, the EU has inaugurated a ‘Social Climate Fund’ of over €70 billion to “help citizens finance investments in energy efficiency, new heating and cooling systems, and cleaner mobility”. This financing is not 100% carbon-free, as the EU has opted to promote the switch to electric vehicles, despite the carbon footprint involved in their production and environmentally-damaging rechargeable batteries. Nevertheless, the long-term impact of these vehicles is far smaller than that of traditional internal combustion engines, making European policymakers more than willing to embrace EVs to facilitate the green transition.

Brussels has thus far refused to take a similar approach to tobacco regulation, even as its current approach seems to have hit a wall in terms of public health impact; per the 2020 evaluation of the Tobacco Tax Directive, the bloc’s tax policies failed to significantly reduce smoking rates after 2014. As they consider a revision of the Directive to include more novel products, EU leaders instead continue to insist smokers either quit cold turkey or continue to pay a high price for their nicotine addiction, regardless of what form that nicotine comes in.

This has led harm reduction advocates to warn European policymakers risk going in a counterproductive direction if e-cigarettes and vaping devices are lumped together with tobacco products as part of the overhaul. This is because e-cigarettes are not only a step towards quitting for many, but also a less harmful substitute for those smokers struggling to quit their nicotine habit altogether – half of current smokers in the EU have tried quitting and failed. Since the majority of the most harmful toxins in cigarettes are absent from vapes, a study by Public Health England found them to be “at least 95% less harmful than smoking”.

Proponents of harm reduction argue a blanket tax hike which treats vaping devices like cigarettes could actually impede smoking cessation, with the Tax Foundation writing that “the effectiveness of cigarette excise taxes goes up when cheaper, less harmful substitutes are widely accessible.”

The EU’s open-minded approach to electric vehicles acknowledges the need for alternative options to effect lasting behavioural change. Just as it is unfeasible to expect Europeans to stop travelling by car, the EU review of its Tobacco Tax Directive could ultimately determine a nicotine-free Europe is not realistic in the short-term.

Ultimately, reducing the overall damage by offering citizens safer alternatives to what ails them – be it carbon or cigarettes – could prove a more effective strategy for changing public behaviour.

This story first appeared on Sustainability Times

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