This summer, Sweden blocked an effort to set a minimum tax rate on nicotine pouches in the European Union for the first time. The finance minister, Elisabeth Svantesson, boasted on social media that she would not let the EU “shock-increase the taxes on white snus.”

For Sweden, the move was both economic and cultural. The country has been the main manufacturer of the centuries-old snus as well as its modern offshoot, nicotine pouches. Traditional snus contains ground-up tobacco leaves and is illegal throughout most of Europe, but nicotine pouches, called “white snus” in Sweden, have become a roughly $7 billion global market.

These small pouches, which give users a buzz when placed between the gum and lip, now sit at the center of a public health conundrum for European countries: As the EU looks to increase the minimum cigarette tax for the first time since 2011, how should the bloc treat tobacco and nicotine products that were relatively unknown or didn’t exist back then?

Such taxes are a key way for governments to drive down tobacco use, particularly smoking, and prevent the health problems they cause. Everyone agrees that nicotine is addictive. While the tobacco industry argues that new products shouldn’t be taxed as heavily as cigarettes because they’re presumed to be less harmful, public health officials and anti-tobacco groups point out that they are dangerous for young people and their long-term health risks remain unknown.

As Sweden and other countries with significant tobacco industries push back against minimum taxes on vapes, heated tobacco and pouches, the proposed tax directive is being watered down. About a year after discussions began, the Council of the European Union, which includes the finance ministers for the 27 member states, has yet to reach a compromise.

The stalemate “reflects fundamentally different approaches to tobacco and nicotine control across Europe,” said Erin Roman, director of Smoke Free Partnership, a coalition of 57 European groups focused on tobacco policy and anti-tobacco advocacy.

She said the proposed tax has been “weakened to the point where it no longer delivered on the original public health ambition” of the European Commission, the executive arm of the EU. “New nicotine products received increasingly favorable treatment, despite growing concerns about their rapid uptake among young people,” she said.

Similar battles are playing out across the globe, from Vietnam and South Africa to the U.S.

New products, new problems

Fifteen years after the EU wrangled over cigarette taxes, setting a minimum tax of 1.80 euros per pack, the tobacco industry says its future is in nicotine pouches, heated tobacco products and electronic cigarettes. Philip Morris International and British American Tobacco — the two largest companies in the world outside China — say these products will account for more than half of their revenues within a decade.

As these products have grown in popularity, the EU is looking to include them in the tax code while also raising the minimum cigarette tax by several euros. 

Revising the tax code is part of the EU’s effort to reduce the number of deaths from tobacco. Stricter smoking regulations coupled with higher taxes have led to a decline in smoking since 2012, according to a Commission report, but across the EU more than 700,000 people still die each year from tobacco use. The Commission estimates that reducing tobacco use through tax increases could save the bloc as much as 85 billion euros annually.

“Higher tobacco taxes and prices have been demonstrated to be the single most effective measure” to lower tobacco use, improve health and increase revenues, the Commission said in its report.

The Commission also stressed in its original tax proposal that some products can be a gateway to cigarette smoking and that taxing new products is an important way to curb nicotine use among young people. 

Products such as pouches, heated tobacco and e-cigarettes are generally considered safer than cigarettes for adults because users do not inhale certain cancer-causing toxins, but there’s little research on these new products. Public health experts stress that nicotine is known to stunt brain development in individuals under 25 and can lead to cardiovascular issues.

The tobacco industry and its allies, however, say taxes on noncombustible products should be significantly lower than cigarettes to encourage consumers to move to less harmful products.

“These products have different characteristics and risks associated with their use, which should be reflected in their taxation,” said Ilias Konteas, director of public affairs at Tobacco Europe, which represents British American Tobacco, Imperial Brands and JTI, formerly Japan Tobacco Company.

Konteas told The Examination by email that tax increases should be gradual and should account for the cost of living in different countries so consumers don’t seek cheaper, illicit cigarettes. 

The company that has the most to lose or gain right now is Philip Morris International, the leading manufacturer of heated tobacco products and nicotine pouches, according to Euromonitor. 

The multinational tobacco company has promised to put cigarettes “in a museum” in favor of noncombustible products. In 2022, the company paid about $16 billion for Swedish Match, the maker of the leading nicotine pouch, Zyn. Philip Morris International has lobbied globally for favorable regulations and taxes for all its tobacco products — and it has pushed EU staff to do its bidding for the company in other countries. 

Philip Morris did not respond to a request for comment. In its 2025 annual report, the company stated, “We believe that regulation and taxation should differentiate between cigarettes and products that present, are likely to present, or have the potential to present less risk of harm to adult smokers who switch to these products.”

Across Europe, diverging opinions on risk

In July 2025, the EU Commission put forth its proposal for new minimum taxes for cigarettes and noncombustible products, suggesting rates of 4.30 euros for a pack of cigarettes, 2.16 euros for a pack of heated tobacco sticks and about 1.14 euros for a can of pouches, depending on the amount of nicotine. The council of member states, which must vote unanimously on those taxes, then began negotiating. These negotiations have been far from simple.

In the first half of this year, Cyprus led the negotiations as the president of the council. Cyprus, which has the second lowest tax rate on cigarettes at 2.64 euros a pack, proposed setting the tax at 4 euros a pack. 

While there is no EU-wide minimum tax on noncombustible products, most countries have set their own rates on heated tobacco and e-cigarettes; about half tax nicotine pouches, according to a review of tax policies by The Examination. Pouches are banned in some EU countries, including France, and classified as an unauthorized “novel food” in Germany, which bars retail sales. Despite its tough tobacco laws, meanwhile, Ireland has no excise tax on nicotine pouches. 

Under the latest public draft — released by Cyprus — most member states would have to increase taxes on all tobacco and nicotine products. Some countries would levy taxes on pouches, vapes and heated tobacco for the first time. 

Cyprus’s proposal lowered the minimum tax on a can of pouches from the EU Commission’s proposal by almost half, to approximately 0.64 euros depending on the amount of nicotine per pouch.

Even that rate would force Sweden to more than quadruple its tax on pouches, which is roughly 0.15 euros per can of 20. Italy’s nicotine pouch tax is 0.18 euros per can; Portugal’s newly established law sets a tax of 0.52 euros. 

Cyprus also watered down the proposed minimum tax on heated tobacco products. Its proposal reduced the tax on a pack of heated tobacco sticks to 1.60 euros, down from the 2.16 euros proposed by the EU Commission.

Adam Hoffer, director of excise tax policy at the Washington-based nonprofit tax policy group Tax Foundation, said those proposed rates are a start but not low enough. 

“I am encouraged that there seems to be at least a recognition from the EU perspective that these products are less harmful and should receive a lower tax rate,” said Hoffer, who writes regularly on tobacco and alcohol taxes for the Tax Foundation. 

Hoffer said he believes pouches should be taxed at 10% the rate of cigarettes and that heated tobacco sticks should be taxed at 25% of cigarettes, given the relative health risks to adults.

Though some researchers agree that these products are less harmful than cigarettes, there appears to be no scientific basis for those figures. 

The Tax Foundation does not identify its donors, but its annual gala lists tobacco companies Altria and Reynolds American among its sponsors. Last fall, Hoffer spoke at a tobacco-friendly event in Geneva held to counter a WHO meeting where tobacco-control measures are debated.

With Cyprus’s proposal having cut an automatic tax adjustment every three years to track inflation, the path forward looks challenging. 

Ángel López-Nicolás, a professor of economics at the Polytechnic University of Cartagena in Spain who focuses on tobacco tax policy impacts, wrote in a recent analysis that reaching an agreement will be difficult. Getting the members to agree “is a very high bar, difficult to meet.”

A path forward? 

Ireland, which took over the council presidency in July, hasn’t publicly released a proposal but it is staunchly anti-tobacco and has the highest cigarette tax rate in the EU. The country has until December to try to bring the member states to an agreement before Lithuania, which also has strict tobacco controls, takes over. Greece, which has a significant tobacco industry, is in charge after that. 

A spokesperson for the Irish presidency of the council said the country “will act as an honest broker” while working with member states to reach a compromise. 

Roman of Smoke Free Partnership said the Irish presidency is a chance “to rebuild political momentum” in negotiations. 

“This is not simply about taxation,” she said. “It is about ensuring that tobacco and nicotine products do not remain cheap, accessible and attractive to the next generation.”