By Timothy S. Donahue

Top Takeaways:

• September slowdown: EU diplomats expect little progress on the Tobacco Excise Directive immediately after Sweden’s Sept. 13 election.
• Pouch fight: Sweden remains resistant to proposals that could sharply increase taxation of nicotine pouches and narrow their price advantage.
• October test: Ireland hopes to secure a deal in October, but prolonged Swedish coalition talks could complicate a potential vote.

Sweden’s election could put the European Union’s tobacco tax overhaul on hold again.

EU diplomats expect limited progress when member states resume negotiations on Sept. 14 to revise the Tobacco Excise Directive (TED), with Sweden holding national elections just one day earlier and potentially facing weeks of coalition negotiations.

The timing could leave Stockholm without the political authority to compromise on one of the most contentious aspects of the proposal: how the EU should tax nicotine pouches and other newer nicotine products.

A Swedish EU official told Euractiv not to expect a clear Swedish position at the first meeting after the election.

That could create problems for Ireland, which holds the rotating presidency of the Council of the EU and hopes to reach an agreement on the directive in October. A key vote could occur at an Oct. 9 meeting of the EU’s Economic and Financial Affairs Council (ECOFIN), which brings together the bloc’s finance and economy ministers.

“The meeting will discuss and look to find a way forward on remaining technical issues in the text, such as definitions, rather than political conflict lines,” an Irish diplomat told media of the September talks.

The proposed TED revision would overhaul EU tobacco excise rules and extend the framework to next-generation nicotine products that have emerged or expanded significantly since the directive’s last update, such as nicotine pouches.

The negotiations advanced significantly under the previous Cypriot Council presidency but ultimately stalled due to Swedish concerns about the proposed treatment of nicotine pouches.

Sweden holds a unique position in European tobacco policy. It is the only EU member state permitted to sell snus, a traditional oral tobacco product prohibited elsewhere in the bloc. Swedish policymakers have repeatedly resisted measures they believe could undermine the country’s approach to smoke-free nicotine products.

Swedish MEP Jessica Polfjärd said the election’s impact on the negotiations remains uncertain but made clear Stockholm’s position on snus.

“It is important to me, and to Sweden, that we are represented in the negotiations and that we stand up for Swedish snus,” she told Euractiv.

The next Swedish government is also likely to face pressure from harm-reduction advocates to maintain a substantial tax differential between cigarettes and lower-risk nicotine products.

“Our message to any administration is the same: Respect the risk differentiation between combustibles and the smoke-free nicotine alternatives for risk-based, proportionate policies, including taxation,” said Delon Human, leader of Smoke Free Sweden.

Human warned against using tax harmonization to eliminate the price advantage that smoke-free products have over cigarettes. “They will not reduce nicotine use – they will push people back towards smoking,” he said.

The debate reflects a much broader disagreement over what Europe’s tobacco policy is ultimately supposed to accomplish.

Swedish officials and harm-reduction advocates cite the country’s exceptionally low cigarette-smoking prevalence and argue that the widespread use of snus and other smoke-free nicotine products has contributed to the decline. European health authorities, meanwhile, have expressed concern about the health effects and the growing popularity of nicotine pouches and other nicotine products.

That disagreement becomes particularly important when translated into tax policy. A tax structure that maintains substantial differences between cigarettes and smoke-free products would recognize differences in product risk. Higher harmonized taxes on nicotine products could narrow those price differences.

There is also considerably more money at stake in the broader tobacco tax debate than the price of a can of pouches.

The tobacco excise proposals are linked to discussions about the EU’s next long-term budget, under which Brussels has proposed generating approximately €11.2 billion ($12.9 billion) annually from national tobacco excise revenues.

For Sweden, however, the immediate issue is political.

If the Sept. 13 election leads to prolonged negotiations to form a government, Swedish representatives could have limited room to negotiate or may abstain from an October vote while a new administration is being assembled.

The disagreement extends beyond taxation. An EU official told Euractiv that policymakers should remember that Brussels’ long-term ambition is not merely a smoke-free Europe by 2040 but ultimately a nicotine-free Europe.