The Cyprus Chamber of Commerce and Industry (KEVE) has raised the alarm over a proposed tobacco tax hike by the European Commission, warning it could harm legal businesses and fuel the illegal trade in tobacco products.
The controversial proposal, discussed last week at the EU Finance Ministers’ Council, calls for sweeping increases to tobacco taxes across Europe. These include a 258% increase on roll-your-own tobacco, a 139% increase on cigarettes, and steeper levies on e-cigarettes and heated tobacco products, which are currently taxed at lower rates.
KEVE: Tobacco tax hike won’t help public health
Speaking to Sigma TV’s Mesimeri kai Kati programme, KEVE’s Senior Trade Officer and Tax Affairs Lead Zacharias Manitaras said the organisation supports policies that promote public health and reduce smoking. However, he stressed that excessive taxation does not reduce consumption — it simply pushes consumers to the black market.
“In Cyprus and across Europe, experience has shown that large tax hikes don’t discourage smoking, but shift the market toward illegal trade,” he said.
KEVE is firmly opposed to any increases, Manitaras added, noting that a significant portion of the Cypriot tobacco market is already illicit. “In 2024, 14% of cigarettes and 53% of rolling tobacco were sold illegally. That’s at least €44 million in lost state revenue that could have funded health, education, and social care.”
600 kiosks closed since 2013
Manitaras also warned of the impact on small, local businesses. “Since 2013, when tobacco tax increases began, over 600 kiosks — mostly family-run — have shut down. These were legitimate businesses supporting neighbourhoods and paying their taxes,” he said.
“Every new tobacco tax hike just strengthens the illegal market.”
He also noted that the EU’s new proposal extends to tobacco alternatives such as e-cigarettes, heated tobacco, and nicotine pouches, all of which are now expected to face significant new taxes.
Call for Cyprus to request transitional period
KEVE is urging the government to invoke the flexibility clause built into the draft directive and request a formal extension to the transition period.
“Cyprus is a special case because of the Green Line,” said Manitaras. “It allows mass movement of illegal products, so we must formally request to use our right to delay the tax increases. This would give us time to strengthen enforcement and stabilise the legal market before raising taxes.”
Also read: Greece smoking ban measures aim to protect minors
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