EU eyes extending excise

The EU Commission has said that it is looking at whether the tobacco excise system should be extended to cover unmanufactured tobacco.

The Commission made its comment in reply to two members of the EU parliament who had asked what the Commission was doing to fight ‘bulk tobacco inflows into the European Union’.

In a preamble to their question, the Italian MEP, Fulvio Martusciello, and the Slovenian MEP, Patricija Šulin, said the fight against the illegal tobacco trade centered largely on manufactured cigarettes.

However, according to a study carried out by the Universita’ Cattolica del Sacro Cuore and Transcrime in December 2016, the illegal trade in bulk tobacco, or the sale of unbranded cut tobacco outside legitimate channels, had been increasing.

More than €870 million per year was lost in eight EU member states alone, a considerable proportion because of inflows from outside the EU, mainly from Bosnia and Herzegovina.

The illegal tobacco trade was in breach of the competition laws laid down in Article 101 of the Treaty on the Functioning of the European Union, but bulk tobacco had never been cited as a growing problem.

‘In the light of the above information, what is the Commission doing to fight bulk tobacco inflows into the European Union?’ they asked.

In answering, the Commission said it considered smuggling of bulk tobacco a growing and worrying phenomenon. The diversion of bulk tobacco of both EU and non-EU origin to be used for illicit cigarette production or roll-your-own cigarettes had been identified as an increasing problem within the EU and caused losses of excise duties for member states.

The Commission said it had adopted in 2013 a comprehensive strategy to combat the illicit tobacco trade and had been implementing it in close co-operation with member states.

‘In addition, to address more specifically the issue of bulk tobacco smuggling, the Commission is currently carrying out a review of Directive 2011/64 on the excise duty applied to manufactured tobacco,’ the Commission said. ‘One of the issues that the Commission is looking at in that context is whether to extend the excise system to raw tobacco, which is currently exonerated from excise duties.’