Taxing question

A Portuguese member of the EU Parliament has asked the Commission for information on how minimum cigarette taxes are arrived at in member states.

In a preamble to his question, which will be answered in writing by the Commission, Miguel Viegas said Council Directive 2011/64/EU of 21 June 2011 on the structure and rates of excise duty applied to manufactured tobacco made it obligatory for all taxes on cigarettes to be based on a mixed system made up of two components: a proportional (ad valorem) duty, applied to the selling price, and a specific duty, which is defined as a fixed value paid per individual cigarette.

‘The Directive allows each country to introduce a minimum tax for each tobacco product category, thus preventing the placing on the market of very cheap brands,’ he said.

‘The formula used to calculate the minimum tax varies from country to country, whether in the base price for calculating this minimum tax threshold or the multiplier used. Of course, the choice of method strongly affects how the tax burden is spread between brands.’

Viegas asked:

‘Can the Commission provide a comparative study on the methodologies used in the member states to calculate the minimum tax, particularly with regard to the two main indicators, the most popular price category (MPPC) and the weighted average price (WAP), including the respective multiplier for each?’