Proposal for a Council Directive amending Directive 92/79/EEC, Directive 92/80/EEC and Directive 95/59/EC as regards the structure and rates of excise duty applied on manufactured tobacco
Date: 2001-03-14
Institutions: European Commission
Subjects: tax harmonisation, tax system, tobacco, tobacco industry

26.6.2001

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Official Journal of the European Communities

C 180 E/235

Proposal for a Council Directive amending Directive 92/79/EEC, Directive 92/80/EEC and Directive
95/59/EC as regards the structure and rates of excise duty applied on manufactured tobacco

(2001/C 180 E/19)

COM(2001) 133 final (cid:151) 2001/0063(CNS)

(Submitted by the Commission on 14 March 2001)

THE COUNCIL OF THE EUROPEAN UNION,

other than turnover taxes which affect the consumption
of manufactured tobacco.

Having regard to the Treaty establishing the European
Community, and in particular Article 93 thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament,

Having regard to the opinion of
Committee,

the Economic and Social

Whereas:

(1) In accordance with Article 4 of Council Directive
92/79/EEC of 19 October 1992 on the approximation
taxes on cigarettes (1) and Article 4 of Council
of
Directive 92/80/EEC of 19 October 1992 on the approxi-
mation of taxes on manufactured tobacco other than ciga-
rettes, (2) an in-depth review of the rates and structure of
excise duties on tobacco products has been carried out.

(2) The Commission’s

subject, of
13 September 1995 (3), merely drew attention to certain
difficulties encountered in implementing the Directives,
without proposing any specific solutions.

report on the

first

(3) The Commission’s second report of 15 May 1998 (4),
examined the necessary technical amendments, which
were mainly to do with adjusting the incidence of the
overall minimum duty on cigarettes, but kept
the
structures and rates of duty unchanged. The report,
submitted to the Council on 18 May 1998,
included a
proposal for an amending Directive (5).

(4) The proposals made by the Commission were largely
adopted in Council Directive 1999/81/EC of 29 July
1999 amending Directive 92/79/EEC on the approxi-
taxes on cigarettes, Directive 92/80/EEC on
mation of
taxes on manufactured tobacco
the approximation of
other than cigarettes and Directive 95/59/EC on taxes

(1) OJ L 316, 31.10.1992, p. 8; Directive as amended by Directive

1999/81/EC (OJ L 211, 11.8.1999, p. 47).

(2) OJ L 316, 31.10.1992, p. 10; Directive as amended by Directive

1999/81/EC (OJ L 211, 11.8.1999, p. 47).

(3) Com(95) 285 final.
(4) Com(98) 320 final.
(5) OJ C 203, 30.6.1998, p. 16.

(5) An analysis of the changes of prices and excise rates for
tobacco products in the Community shows that there are
still considerable differences between Member States
which may disturb the operation of the internal market.

(6) Greater convergence between the tax rates applied in the
Member States would help reduce fraud and smuggling
within the Community. The introduction of a fixed
minimum amount expressed in euros, in addition to the
minimum excise incidence of 57 % of the retail selling
in
price of
demand, will ensure that a minimum level of excise
duties is levied on such cigarettes. Member States which
already levy a high level of excise duty should be allowed
greater leeway in setting the rates.

category most

cigarettes of

the price

(7) The Treaty requires that the definition and implemen-
tation of all Community policies and activities ensure a
high level of human health protection. Cigarettes and
fine-cut tobacco intended for the rolling of cigarettes are
both harmful to consumers’ health. The level of taxation
is a major factor in the price of tobacco products, which
in turn influences consumers’ smoking habits. For this
it is necessary gradually to bring the minimum
reason,
rates for fine-cut rolling tobacco closer to the minimum
rate for cigarettes.

(8) In order to avoid a fall in the value of the Community
fine-cut
minimum rates of duty on cigars, cigarillos,
tobacco intended for
the rolling of cigars and other
smoking tobaccos, a phased increase in the minimum
rates, expressed as a specific amount, is needed.

(9) Any harmonisation of

the structures of excise duties
should be such as to prevent distortions of competition
between different categories of manufactured tobacco
belonging to the same group and thereby facilitate
access to the domestic markets of the Member States.

(10) In the interests of uniform and fair taxation, the definition
of cigars and cigarillos, set out
in Council Directive
95/59/EC of 27 November 1995 on taxes other than
turnover taxes which affect the consumption of manu-
factured tobacco (6), should be adapted so that a type of
cigar which is similar in many respects to a cigarette is
treated as a cigarette for excise purposes.

(6) OJ L 291, 6.12.1995, p. 40, Directive as amended by Directive

1999/81/EC.

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Official Journal of the European Communities

26.6.2001

(11) Member States should be given more effective means to
deal with unfair pricing practices or the appearance of
products which disrupt the market: this objective can be
achieved by authorising Member States
to levy a
minimum excise duty on cigarettes on condition that it
does not exceed the excise duty levied on cigarettes of the
most popular price category.

(12) It is necessary to provide for a regular review procedure:
however, a four-yearly review period would be more
appropriate, to allow time to evaluate the amendments
introduced by this Directive.

(13) Directives 92/79/EEC, 92/80/EEC and 95/59/EC should

therefore be amended accordingly,

HAS ADOPTED THIS DIRECTIVE:

Article 1

Directive 92/79/EEC is amended as follows:

1. Article 2 is replaced by the following

(cid:145)Article 2

Each Member State shall apply an overall minimum excise
duty (specific duty plus ad valorem duty excluding VAT), the
incidence of which shall be set at 57 % of the retail selling
price (inclusive of all taxes) and EUR 70 per 1 000 ciga-
rettes for cigarettes of the price category most in demand.

Member States which levy a total excise duty of at least
EUR 100 per 1 000 cigarettes for cigarettes of the price
category most in demand need not comply with the 57 %
minimum incidence requirement.

The overall minimum excise duty on cigarettes shall be
determined on the basis of cigarettes of the price category
most in demand according to data established as at 1 January
of each year.(cid:146)

other

than turnover

taxes which affect

the
taxes
consumption of manufactured tobacco and, acting unani-
mously after consulting the European Parliament, shall
adopt
the
Commission and the examination by the Council shall
take into account the proper functioning of the internal
market and the wider objectives of the Treaty.

the necessary measures. The

report by

___________
(*) OJ L 291, 6.12.1995, p. 40.(cid:146)

Article 2

Directive 92/80/EEC is amended as follows:

1. In Article 3(1) the following subparagraphs are added:

(cid:145)As from 1 January 2002, the overall excise duty levied on
fine-cut smoking tobacco intended for the rolling of ciga-
rettes shall be at least equal to 33 % of the retail selling
price inclusive of all taxes, or EUR 28 per kilogram.

As from 1 January 2003, the overall excise duty shall be at
least equal to the following rates or minimum amounts:

(a)

in the case of cigars or cigarillos: 5 % of the retail selling
price inclusive of all taxes or EUR 11 per 1,000 items
or per kilogram;

(b) in the case of fine-cut smoking tobacco intended for the
the retail selling price

rolling of cigarettes: 36 % of
inclusive of all taxes, or EUR 31 per kilogram;

(c)

in the case of other smoking tobaccos: 20 % of the retail
selling price inclusive of all
taxes, or EUR 20 per
kilogram.

As from 1 January 2004, the overall excise duty levied on
fine-cut smoking tobacco intended for the rolling of ciga-
rettes shall be at least equal to 39 % of the retail selling
price inclusive of all taxes, or EUR 34 per kilogram.(cid:146)

2. Article 4 is replaced by the following:

(cid:145)Article 4

2. Article 4 is replaced by the following:

(cid:145)Article 4

Not less frequently than every four years after the Council’s
previous examination, the Council, acting on the basis of a
report and, where appropriate, a proposal
from the
Commission, shall examine the overall minimum excise
duty laid down in Article 2 and in Article 3(2) and the
structure of excise duties as defined by Article 16 of
Council Directive 95/59/EC of 27 November 1995 (*) on

Not less frequently than every four years after the Council’s
previous examination, the Council, acting on the basis of a
report and, where appropriate, a proposal
from the
Commission, shall examine the rates of duty laid down
consulting the
herein and,
European Parliament, shall adopt the necessary measures.
The report by the Commission and the examination by
the Council shall take into account the proper functioning
of the internal market, the real value of the rates of duty
and the wider objectives of the Treaty.(cid:146)

acting unanimously after

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Article 3

Article 4

Directive 95/59/EC is amended as follows:

1. Article 3, points (3) and (4) are replaced by the following:

Member States shall bring into force the laws, regulations and
administrative provisions necessary to comply with this
Directive by 1 January 2002 at
the latest. They shall
forthwith inform the Commission thereof.

(cid:145)3.
Rolls of tobacco with a threshed blend filler and with
an outer wrapper of the normal colour of a cigar covering
the product in full, including where appropriate the filter
but not in the case of tipped cigars, the tip, and a binder,
both being of reconstituted tobacco, where the unit weight,
not including filter or mouth-piece, is not less than 1,2 g
and where the wrapper is fitted in spiral form with an acute
angle of at least 30(cid:176) to the longitudinal axis of the cigar;

4.
Rolls of tobacco with a threshed blend filler and with
an outer wrapper of the normal colour of a cigar, of recon-
including
stituted tobacco, covering the product
where appropriate the filter but not, in the case of tipped
cigars, the tip, where the unit weight, not including filter or
mouth-piece, is not less than 2.3 g and the circumference
over at
less than
34 mm.(cid:146)

least one third of

the length is not

in full,

When Member States adopt those provisions, they shall contain
a reference to this Directive or be accompanied by such a
reference on the occasion of
their official publication.
Member States shall determine how such reference is to be
made.

Member States shall communicate the text of the provisions of
national
law which they adopt in the field covered by this
Directive.

Article 5

This Directive shall enter into force on the twentieth day
following that of its publication in the Official Journal of the
European Communities.

2. Article 16(5) is replaced by the following:

(cid:145)5. Member States may levy a minimum excise duty on
cigarettes, provided that it does not exceed the excise duty
levied on cigarettes of the most popular price category.(cid:146)

Article 6

This Directive is addressed to the Member States.