Tobacco taxation

One of the goals of the Tobacco Tax Act is to promote also the health policy goals of the Tobacco Act. Tobacco tax is collected on cigarettes, cigars, cigarillos and roll-your-own tobacco as well as other products containing tobacco and rolling paper. Since 2017, tobacco tax has also been collected on nicotine and nicotine-free liquids of electronic cigarettes.

In 2018, the tax structure of cigars was altered to be similar to that of other tobacco products. Now, in addition to value tax, per unit tax is also levied for cigars.  The goal is to raise the level of cigar taxes in euros at least to the same level with inexpensive cigarettes.

The tobacco tax has been raised regularly in recent years, twice a year.

Under Prime Minister Petteri Orpo’s governance agenda, tax increases will be continued with a total of 100 million euros in the government period 2023–2027. The tax increases will be made at the end of the government term. Tax increases are not planned for the beginning of the government term, i.e. for the years 2024–2025.

The sale of nicotine pouches was deregulated in the spring of 2023. They were included in tobacco taxation in 2024. The Ministry of Finance estimates that nicotine pouches will contribute to an annual increase in tobacco tax revenue of approximately 50 million euros.

Tax revenues grow

The amount of taxes paid on tobacco has steadily increased in recent years. This has been driven by tax hikes, despite a decline in smoking. In 2023, the Ministry of Finance estimates the tobacco tax yield to be 1,215 million euros.

Passenger import is controlled by the Tobacco Act’s restriction based on warning labels according to which, a passenger may only import 200 cigarettes to Finland if the packets do not have text warnings in Finnish and Swedish.

Vast differences between EU countries

There are considerable differences in the tobacco taxation and the prices of tobacco products in different EU countries even though tobacco taxation has been harmonised with the tobacco taxation directive.

In Finland, the average price of cigarettes was the third highest in the EU in 2020. The share of taxes in the price of cigarettes in Finland was the second highest in the EU. The differences in taxes and tax structures for other tobacco products are even greater among the member states of the European Union.

Nicotine pouches are subject to taxation in Sweden, Denmark, Estonia, Latvia, Hungary, and Italy. Currently, the highest taxes are in Estonia and Latvia.

Did you know that

  • Raising tobacco tax is one of the most efficient ways of cutting down the consumption of tobacco products.
  • The high price of tobacco prevents people from taking up smoking, increases the number of attempts to quit and reduces health differences between different demographic groups.
  • According to the Word Bank, the health impact of the tax level should be priority in tobacco taxation.