EU anger as Malta vetoes €13bn EU‑wide tobacco tax overhaul

Maltese minister for finance Clyde Caruana (R) speaking to European Investment Bank (EIB) president Nadia Calvino (L) during a meeting of finance ministers in Brussels (Source: EPA/OLIVIER MATTHYS)

Economy

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By Wester van Gaal,
Amsterdam
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European countries failed to reach agreement on the EU-wide tobacco taxation law on Monday (9 November) after Malta refused to sign off on a deal supported by the other 26 member states.

“We have an agreement of 26, which is a tremendous achievement,” said Irish finance minister Simon Harris after meeting with his counterparts in Brussels.

Earlier in the day, Harris said the vast majority supported the deal and that member states were “not worlds apart” and “inches away”, before adjourning the meeting “to take stock” for another round of bilateral talks after Finland, Estonia and Malta still objected to the compromise. 

But in the end, it wasn’t enough. Maltese finance minister Clyde Caruana said Malta “supports the objectives” of the reform, but said his country’s concerns “still persist”.

He objected mainly to raising the minimum tax rate every three years in line with inflation and adjusting to differences in price levels between member states, so that countries where the cost of living is more expensive have higher floor rates.

But according to Caruana these plans “do not provide genuine flexibility” for national conditions.

“The proposed minimum [excise tax] rates remain well above current national levels, notwithstanding the latest changes related to nicotine pouches,” said Caruana. “Such increases risk having disproportionate effects in Malta.” 

Estonia also objected to the indexation mechanism but accepted an Irish compromise on Monday that freezes the EU minimum rates until the law's next revision, the date of which has not been set.

Finland, the other holdout, wanted higher taxes, but in the end also agreed to the compromise. 

Exasperation

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Maltese minister for finance Clyde Caruana (R) speaking to European Investment Bank (EIB) president Nadia Calvino (L) during a meeting of finance ministers in Brussels (Source: EPA/OLIVIER MATTHYS)

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Author Bio

Wester van Gaal is our economics editor. He joined EUobserver in September 2021. Previously, he was editor-in-chief of Motherboard, Vice Media’s technology and science website, and worked as a climate economy journalist for The Correspondent. He is based in Amsterdam, the Netherlands.

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