CONTENTS

LIST OF ABBREVIATIONS 6

LIST OF BOXES 7

LIST OF FIGURES 7

LIST OF TABLES 9

EXECUTIVE SUMMARY 10

INTRODUCTION 13

BACKGROUND TO THE RESEARCH TOPIC: TOBACCO USE AND POLICIES (WORLDWIDE AND IN THE EUROPEAN UNION) 15

2.1. The Health and Economic Burden of Tobacco Use 15

2.2. Key Trends in Tax Policy and Smoking Behaviour in the EU – Current State and Implications 17

2.3. Tobacco Taxation Directive (TTD): The Proposed Revision 20

MODELLING THE EFFECT OF EXCISE TAX INCREASES IMPLIED BY THE PROPOSED TOBACCO TAXATION DIRECTIVE 27

3.1. Tobacco Excise Tax Simulation Model (TETSiM) – Model Structure and Assumptions 27

3.2. Data 29

3.3. Scenario Modelled 31

COUNTRY CASE STUDIES 33

4.1. Rationale for the Case Studies 33

4.2. Summary of the Results 33

4.3. Bulgaria 37

4.3.1. Baseline: Market Structure and Taxation in 2024 37

4.3.2. Modelling Results 38

4.3.3. Conclusion and Discussion 40

4.4. Czechia 41

4.4.1. Baseline: Market Structure and Taxation in 2024 41

4.4.2. Modelling Results 42

4.4.3. Conclusion and Discussion 44

4.5. France 45

4.5.1. Baseline: Market Structure and Taxation in 2024 45

4.5.2. Modelling Results 46

4.5.3. Conclusion and Discussion 47

4.6. Italy 49

4.6.1. Baseline: Market Structure and Taxation in 2024 49

4.6.2. Modelling Results 50

4.6.3. Conclusion and Discussion 52

4.7. Poland 53

4.7.1. Baseline: Market Structure and Taxation in 2024 53

4.7.2. Modelling Results 54

4.7.3. Conclusion and Discussion 55

4.8. Portugal 57

4.8.1. Baseline: Market Structure and Taxation in 2024 57

4.8.2. Modelling Results 58

4.8.3. Conclusion and Discussion 60

4.9. Romania 61

4.9.1. Baseline: Market Structure and Taxation in 2024 61

4.9.2. Modelling Results 62

4.9.3. Conclusion and Discussion 64

4.10. Slovakia 65

4.10.1. Baseline: Market Structure and Taxation in 2024 65

4.10.2. Modelling Results 66

4.10.3. Conclusion and Discussion 68

4.11. Spain 69

4.11.1. Baseline: Market Structure and Taxation in 2024 69

4.11.2. Modelling Results 70

4.11.3. Conclusion and Discussion 72

DISCUSSION 74

5.1. Key Lessons from the Nine Case Studies 74

5.2. Additional Considerations 75

5.2.1. Illicit Trade and Cross-border Purchases 75

5.2.2. Purchasing Power Parity Adjustment 78

5.2.3. Employment 79

5.2.4. Tobacco Excise Duty Own Resources (TEDOR) 80

6. CONCLUSIONS 83

REFERENCES85

ANNEX 1: IMPACT OF THE PROPOSED TOBACCO TAXATION DIRECTIVE 94

ANNEX 2: TEDOR 95