Emerging Trends of Fiscal Prohibition

The debate on paraprohibitive taxation of tobacco products is gaining increasing traction in European health policy circles. This refers to a taxation strategy that aims not merely to steer consumption, but to effectively suppress it: through sharp price increases, access to legal tobacco and nicotine products is to be rendered economically unattractive or practically impossible. This approach gained momentum through the European Parliament's 2022 "BECA Resolution" (Special Committee on Beating Cancer), which advocates for a "tobacco-free generation by 2040" and recommends making tobacco and nicotine products as unattractive as possible. The measures proposed therein go beyond behavioural steering and aim at the structural displacement of legal markets. The term "paraprohibitive" taxation thus refers to a fiscal strategy that consciously and deliberately crosses the threshold into de facto prohibition.

Single Market, Legal Framework, and Treaty Logic of the EU

The European Tobacco Wholesalers Association (ETV) views this development with deep concern. Such a tax policy not only contradicts fundamental principles of European economic policy but also undermines the Union’s treaty logic. According to Article 3 of the Treaty on European Union, the EU is explicitly tasked with establishing a functioning internal market and promoting economic activity. A taxation approach that pushes certain legal products into unaffordability establishes implicit normative hierarchies of consumption and violates the principle of non-discriminatory market access.

From Steering to Elimination: A Shift in Fiscal Legitimacy

Tobacco products are among the most heavily regulated and taxed consumer goods in virtually all Member States. Tobacco taxation traditionally serves a dual purpose: generating state revenue and influencing health-related behaviour. This dual function is legally legitimised and historically established. However, when tax policy ceases to steer and begins to eliminate a legal market, it steps beyond the bounds of economically justifiable and constitutionally sustainable instruments. This marks a clear departure into covert prohibitionism—with foreseeable side effects.

Illicit Trade and Loss of Control: Empirical Warning Signs

One of the gravest consequences of paraprohibitive taxation is the facilitation of illicit trade. Studies by the OECD, WHO, and European customs authorities clearly show: excessive price increases in highly demanded consumer goods significantly increase black market activity. France, for instance, reports billions of untaxed or counterfeit cigarettes circulating annually following multiple tax hikes. In Germany, the share of tobacco not taxed domestically already exceeds 20 percent, with regional peaks of up to 44 percent. Further tax increases would only intensify this trend. The state would lose not only vital tax revenue but also control over product safety, youth protection, and legal sales channels.

Historical Parallels: The Failure of Prohibition

A look at history underscores the risks of such policies: Prohibition in the United States (1920–1933) did not reduce consumption but instead led to an explosion of illicit markets and the empowerment of organised crime. A similar development threatens the tobacco and nicotine sector if tax policy effectively moves toward market exclusion.

Market Structure and SMEs: Livelihoods at Risk

The tobacco wholesale sector, largely comprised of small and medium-sized enterprises (SMEs), is an essential part of Europe’s regulated goods distribution. These companies ensure the legal, tax-accountable, and youth-protected availability of tobacco products—even in remote and structurally disadvantaged regions. This infrastructure is not easily replaceable. Its weakening or dismantling would result in market distortions, job losses, lost municipal revenues, and a shift from legal offerings to informal or illegal channels.

Between Education and Patronisation: Socio-Political Implications

Tax intervention on legally consumed products raises normative tensions. In a liberal society, the role of the state is to promote health-conscious behaviour through education, awareness, and prevention—not to punish individual consumption choices via fiscal overreach. Tax policies that render legal value chains structurally unprofitable not only infringe upon economic freedoms but may amount to de facto occupational bans. EU primary law establishes clear limits here.

Fiscal Sustainability Versus Revenue Risk

Paraprohibitive taxation is not only questionable from a health policy perspective—it is fiscally counterproductive. Excise taxes like the tobacco duty have historically provided stable revenues. A decline in legal sales volumes driven by tax overload would undermine this function. The foreseeable consequences: growing tax shortfalls, regulatory erosion, and the rise of shadow markets. A supposedly health-oriented strategy would thus become a fiscal liability.

Risk Differentiation Over Blanket Taxation

Uniform taxation of all tobacco and nicotine products is not tenable from a regulatory standpoint. Product categories such as conventional cigarettes, heated tobacco products, e-cigarettes, and oral nicotine vary significantly in risk profiles. Evidence-based tax policy must reflect these distinctions. Countries like Sweden demonstrate that differentiated taxation can be both health-effective and market-compliant. Blanket increases, by contrast, are neither appropriate nor effective.

Youth Protection and Oversight: The Value of the Legal Market

An effective legal market is essential to meaningful youth protection. Only where products are sold by trained retailers under age verification protocols and regulatory oversight can legitimate protective aims be achieved. Over-taxation that undermines this infrastructure also compromises the ability to enforce regulations.

Conclusion: Towards Responsible and Proportionate Tax Policy

The European Tobacco Wholesalers Association (ETV) firmly opposes the introduction of paraprohibitive taxation on tobacco and nicotine products. Such a policy undermines the legitimacy of fiscal governance, destabilises regulated market structures, fosters illicit parallel economies, and violates the principles of evidence-based, proportionate regulation. The ETV instead advocates for a differentiated, risk-based tax approach that aligns public health goals with economic reason, legal certainty, and social responsibility.