In practice, however, the proposal goes much further: it harmonises the tax base for nicotine across the entire European Union, drastically reducing the room for fiscal differences between member states, and undermines one of the last remaining disciplinary mechanisms in the internal market – competition between national tax systems.

The controversy is understandable. In addition to affecting various economic sectors, the measure penalises products often used as alternatives to traditional tobacco or as tools to quit smoking, while also creating clear incentives for the growth of the parallel market. Despite this, the revision has not yet been approved or voted on.

Even so, in 2026, the logic of the new TED already appears to be effectively in force already. Here in Portugal, the 2026 State Budget introduces a specific tax on nicotine pouches, a product which has so far escaped harmonised European taxation. In Poland, taxation on e-liquids for vapes and heated tobacco products has been strengthened, with phased increases already legislated. In Latvia, a specific tax on e-liquids has been introduced, also with automatic increases planned over several years.

All these examples target exactly the same segments the 2025 proposal aims to integrate into a common fiscal base: vaporisers, e-liquids, heated tobacco, and nicotine pouches. The European Commission rarely needs to wait for the final approval of a directive to shape behaviours; it is enough to signal the desired political direction for several member states to align voluntarily. In this way, gradual coordination turns into de facto harmonisation, and fiscal competition begins to disappear, even before any legal obligation exists.

The new TED does not limit itself to updating rates on traditional cigarettes. Its most ambitious goal is to redefine the very tax base for nicotine in Europe, determining what counts as a taxable product, how nicotine is measured, and how different formats – liquids, grams, or devices – are converted into fiscal equivalents. Even if final rates vary between countries, the space for national differentiation shrinks drastically. States stop competing on tax models and start competing only on residual margins.

This trajectory mirrors the path the EU previously followed with VAT and alcohol taxation. In those cases, however, member states retained real room for manoeuvre: rates still vary significantly and tax competition never disappeared completely. With the new TED, the risk is greater. The directive does not merely set minimum rates; it standardises categories and calculation methodologies, turning taxation into an instrument of centralised behavioural engineering.

The European Union has always benefitted from institutional diversity and the possibility for states to experiment with different policies within a common framework. When a country overdid the tax burden, it lost revenue or market control; when another found a better balance, it served as a reference. That dynamic of learning and mutual discipline is now being challenged.

The fact that several countries are already aligning their national policies with the logic of the proposal before any vote in the European Parliament or formal adoption reveals the heart of the problem: member states' fiscal sovereignty, the capacity for institutional experimentation, and the very character of the internal market as a space of policy diversity are being eroded in advance.

It is essential national governments resist the temptation of automatic alignment and actively claim their role in the European legislative process. Otherwise, mindless, unaccountable harmonisation will not be just the final outcome of a directive – it will be the starting point, imposed even before any law exists.