Senator Xavier Iacovelli, who comes from the French presidential majority, is proposing to impose on tobacco manufacturers (Philip Morris International, British American Tobacco, Japan Tobacco International and Seita-Imperial Tobacco) delivery quotas by country, based on the exact quantity of tobacco smoked by their inhabitants, a measure developed and demanded by the World Health Organisation (WHO). According to Iacovelli, 600m cigarettes would be delivered each year to Luxembourg, instead of the current 3bn, but 48bn cigarettes would be delivered to France, compared with the current 30bn. His idea would enable Bercy to pocket an additional €5bn each year in excise duties and VAT.

Asked about these figures, the senator never got back to us. But his figures are out of date. In recent years, cigarette sales in Luxembourg have increased by 10% a year. In 2023, 4.44bn cigarettes and 6,158 tonnes of tobacco were sold. How much of this tobacco is actually consumed in Luxembourg, given the 200,000 cross-border commuters who live there every day? That’s another story, since no one we spoke to has an official figure. But if we apply an increase in sales proportional to the increase in local consumption, we come up with 880m cigarettes a year.

Now let's look at the other part. The 4.44bn cigarettes and 6,158 tonnes of tobacco generated sales of €1.9bn in Luxembourg, according to the finance ministry’s annual report. Of this, €1.289bn went directly into the state coffers (€1.025bn in excise duty and €0.264bn in VAT). Statistics from the European Commission make it easy to understand why: an average pack of 20 cigarettes costs €5.80 in Luxembourg (including €4.06 in tax) compared with €11.50 in France (including €9.78 in tax).

If we were to apply a simple rule of three and tobacco companies were only allowed to deliver 880m cigarettes a year to Luxembourg, tax revenue would fall to €258m, a loss to public finances of just over €1bn.

This is a simplistic calculation, given the negative impact of what used to be known as “tourism at the pumps,” which is well detailed in .

But it gives an idea of what is at stake. Should another public health issue prompt the Luxembourg government to review its position on tobacco taxation? Controlling the supply channels (legal and illegal) and a higher price have a decisive impact on consumption... which in turn has an impact on healthcare costs: every year in Luxembourg, around 3,000 new cases of cancer are diagnosed, and more than 1,100 people die as a result of the disease.

This article was originally published in .