A top executive from British American Tobacco (BAT) is warning that Europe’s push for massive tobacco tax hikes could create a booming illegal market, making the continent another Australia.
Kingsley Wheaton, BAT’s Chief Commercial Officer, said that “exceptionally high excise taxes and extreme regulations” in Australia have made it the world’s worst example. He claims a staggering 80% of the tobacco and nicotine market there is now illegal.
“I fear that what they [Europeans] will do is turn a blind eye to the illegal market,” Wheaton told Euractiv. “This is the Australia story through and through.”
His warning comes as the European Commission proposes a revision of its Excise Tax Directive. The plan calls for a 139% increase in cigarette taxes. It also includes steep hikes for alternative products like e-cigarettes and nicotine pouches. The EU’s goal is to become smoke-free by 2040.
Wheaton argued that the financial incentive for criminals is enormous. He said illegal traders can still profit even if authorities seize 24 out of 25 shipping containers. Just one container getting through is enough to make a large profit.
The European Commission rejects this argument. The EU said the current illegal trade is largely due to different tax rates between member states. The proposed tax changes aim to harmonize the market long-term.
Wheaton also made a case for smokeless alternatives. He acknowledged products like vapes are not risk-free. However, he argued they are far less harmful than continued smoking. He called for a tax system that makes cigarettes more expensive. At the same time, he wants safer alternatives to remain affordable for adults.
The tobacco industry faces an uphill battle in Brussels. EU officials are skeptical of its arguments. They point to the industry’s past misleading claims about “light” cigarettes as a damaging precedent.
