Are even harder times coming for heavy smokers? The latest news from Brussels regarding the revision of the Tobacco Excise Directive is alarming. The prices of cigarettes—as well as heated tobacco and e-cigarette products—are set to rise sharply, as the European Commission is proposing a 139% increase in the excise duty imposed on cigarettes.

However, the apparent backlash from many southern European countries, including Greece, against the Commission’s proposal—which reflects the aspirations of the northern EU member states—may ultimately lead to a political compromise. The solution may involve, on one hand, extending the time for full implementation by introducing a sufficient transitional adjustment period (possibly three years), and on the other hand—most importantly—choosing a mild or moderate scenario among the many on the table.

But the essence remains unchanged. It’s now inevitable. The time when the average price of a 20-cigarette pack in Greece—currently around €4.60—will soar to €6 or €7 is not far off. Of course, it would be significant for smokers if the price doesn’t reach the extreme €28-per-pack scenario. But even at €6–€7, these prices represent increases of 52.2% or 73.9% compared to today—rises that will fall entirely on the smoker, since tobacco companies cannot absorb such costs.

The Problem with Excise Duty

How many myths and truths lie behind the uproar caused by this discussion? All Greeks know that for decades, raising cigarette prices through higher state taxation has been the go-to method for boosting public revenue. Even during times of crisis and reduced purchasing power, successive governments have clung to this “rule.” It was the easy and immediate “solution.”

But today, Finance Minister Kyriakos Pierrakakis, as he stated at the recent ECOFIN, argues that an excessive and abrupt increase in tobacco excise duty must be avoided.

His concern is that such a price surge would lead to reduced demand in favor of smuggling. Thus, the EU’s theoretical goals would “sink”: revenues would not rise—perhaps even fall—and smokers’ health would become even more at risk, as many would turn to questionable-quality black-market products.

A sharp decline in state revenues from tobacco excise would be problematic. Over the past six years, tobacco excise revenues have played a crucial role in improving Greece’s fiscal performance, remaining the second-largest source of excise revenue, after energy products. Last year, tobacco products contributed about 32% of total excise revenues, with energy products leading at 58%.

Total tobacco excise revenues in Greece have consistently exceeded €2 billion annually since 2013 and have been gradually rising since 2017, reaching approximately €2.3 billion in 2024.

Thus, Athens believes that the upcoming large increase in tobacco excise duty should be implemented gradually and strategically, to avoid backfiring.

Prices Across Europe

Since last July, Greece’s Center of Planning and Economic Research (KEPE) conducted a detailed study on the possible effects of revising the TED directive on the Greek economy. It developed a range of price-increase scenarios—from mild to extreme—considering the factor of reduced consumption.

The results projected final prices ranging from a 41.7% increase (to €5.91 per pack in the mild scenario) up to a 569.6% increase (€27.92 per pack) in the extreme case.

The truth is that the financial burden on smokers will be heavy, even if spread over time. Yet, paradoxically, smoking in Greece remains cheap compared to most other European countries.

According to the reliable German data platform Statista, as of last August, the average price of a 20-cigarette pack in Greece was €4.96—the third cheapest in the EU-27. Only Bulgaria (€3.69) and Poland (€4.88) are cheaper.

At the other end, Ireland tops the list with an eye-watering €18.94 per pack, followed by France (€14.25), the Netherlands (€12.42), and Finland (€12.24). The EU average stands at €7.64, with 15 countries ranging between €5.23 and €6.77.

Brussels’ Goals

Why is the European Commission pressing the issue so insistently? An initial attempt to revise the directive was made in 2022, but it was halted early on. Last year, however, the Commission returned with an updated impact study, incorporating additional variables such as inflation, and concluded with a proposal recently discussed by the EU Council of Finance Ministers.

The Commission’s “philosophy” is primarily about combating smoking to protect public health. Higher excise duties—and therefore higher prices—discourage consumption and improve health outcomes.

However, Brussels is also seeking to boost EU-wide revenue through increased tobacco excise taxes, for a deeper reason: the need to find new sources of funding for the EU budget. The €750 billion Recovery Fund ends next year, while new urgent needs have arisen—such as funding European defense and covering the costs of the new trade agreement with the U.S.

One viable way to raise new funds is to channel part of member states’ additional excise revenues on tobacco into the EU budget—a move that is expected to create a new front of tensions and disputes within the Union.

Meanwhile, public health experts continue to stress that raising cigarette prices is the most effective anti-smoking measure, as data from 2009–2023 show that every 10% price increase reduces consumption by 4–6%.

Therefore, Greece—still among the EU countries with the highest percentage of smokers—must strike a delicate balance between protecting public health and managing the economic importance of a harmful product that nevertheless generates significant tax revenue.

Economic Impact

Beyond the effect on smokers’ wallets, an excessive rise in cigarette prices—driven by a surge in excise duty—will have both direct and indirect consequences for economies. Without elaborating, Finance Minister Kyriakos Pierrakakis hinted at these dangerous implications during the ECOFIN meeting, stating that “if prices, both for traditional and innovative products, rise suddenly and more than the market can bear, the impact on the competitiveness equation must be taken into account. It’s an equation that affects investment and exports.”

The KEPE report clearly expresses concern over how Greek exports will be affected. Greece and five other EU countries have a higher share of tobacco exports relative to their total goods exports than the EU average. Moreover, Greece maintains a positive trade balance in tobacco, not only last year but also throughout the previous periods 2020–2023 and 2015–2019.

Specifically, in 2024, Greece ranked second among EU member states in tobacco export share, at 2.04%, just behind Romania’s 2.21%, and recorded a surplus of €514 million. This means tobacco is one of the few export-surplus sectors in Greece’s economy.

Concerns about exports are even greater for heated tobacco products. In recent years, Greece has become an export hub for such products, hosting high value-added manufacturing facilities focused on innovation and exports to foreign markets. The existing regulatory and tax framework—based on tobacco weight—has so far provided stability, predictability, and cost advantages, strengthening Greece’s position on the European and global map.

However, the upcoming revision of the Tobacco Excise Directive (TED) is expected to significantly affect production and distribution costs, as well as the sector’s competitiveness, which may decline since Greece exports heated tobacco products mainly to Eastern and Southern European countries, where demand could shrink.

There’s also the risk of production plants relocating if multinational tobacco companies change their strategy and Greece loses its tax attractiveness. It’s worth noting that the tobacco sector contributes over 1.5% of GDP and supports thousands of jobs. Inevitably, employment will be affected. Most critically, Greece risks shifting from a producer and exporter to a net importer.

The Illicit Trade

In 2009, illicit trade accounted for 3% of the market, but the sharp tax increases during the memorandum years (2010–2013) caused it to skyrocket to 24–25%. According to KPMG’s report from last July, Greece has made significant progress in combating cigarette smuggling. In 2024, the share of illicit cigarettes in total consumption was estimated at 17.5%—the lowest level in the past decade.

Overall, last year, 2.5 billion illicit cigarettes were consumed in Greece, resulting in €438 million in lost public revenue for 2024, compared to €620 million in 2023.

Across the EU, a total of 38.9 billion illicit cigarettes were consumed, with total tax losses for the 27 member states estimated at €14.9 billion—an increase of €3.3 billion compared to 2023.

France ranked worst in tackling smuggling: 37.6% of all cigarettes consumed there were illegal, showing the sharpest rise among all EU countries in 2023. It’s no coincidence this occurred while France tried to curb smoking through heavy taxation, which pushed the average pack price to €14, set to rise further by 2026 in pursuit of its goal for “the first smoke-free generation by 2032.” For now, however, this strategy has mainly driven smokers deeper into the black market.

We Still Smoke a Lot

Are Greeks still heavy smokers? The full truth is that the strong anti-smoking campaigns of recent years, the bans on smoking in enclosed public spaces, shops, and workplaces, combined with the significant price increases on tobacco products since 2009, have dramatically reduced cigarette consumption in Greece.

Indeed, cigarette consumption dropped from 33 billion cigarettes in 2002 to just 18 billion last year. Yet, Greeks still smoke a lot more than most other Europeans.

According to the latest Eurobarometer Special Report (2020–2023), Greece ranks second among EU countries in the percentage of smokers, with 36% of Greeks smoking. Only Bulgaria is higher, at 37%, followed by Croatia (35%) and Romania (34%). Sweden has the lowest rate, at just 8%.

The average Greek smoker consumes 18.13 cigarettes per day—the highest rate in the EU, where the average is 14.1. By age group, 46% of Greeks aged 46–54—nearly half—are smokers.

Eurobarometer data also show that only 3% of people in Greece use electronic cigarettes. Smoking remains the largest preventable health risk, responsible for 700,000 deaths per year in the EU alone. Moreover, about 50% of smokers die prematurely, on average 14 years earlier than non-smokers.