The fundamental objective of this study was to develop further and illustrate the key economic mechanisms underlying the taxation of fine-cut tobacco. Using governmental data sources when available, the aim is achieved using four case studies: The Netherlands, Belgium, the UK and Germany. The study confirms and further explains the key principles of taxing fine-cut tobacco, already demonstrated in the 2015 study.
An obvious correlation exists between the highest levels of illegal and non-domestic consumption (e.g. France, UK, Ireland, Poland and Finland) and the highest taxation rates applied to fine-cut toconsbacco, in comparison with cigarettes. The figures clearly show that any alignment of tobacco taxation, regardless of the products’ specificities, will prevent fine-cut tobacco from fulfilling its buffer function, leading to increased illegal trade of cigarettes and driving down government revenues.
Read more about the relationship between tax and illegal trade
