Tax revenues from nicotine are rising and should continue to do so according to the budget. But the expenditure side is often forgotten: One in ten deaths in Luxembourg is due to tobacco, often after a long illness. Nevertheless, more people are taking up nicotine again - especially young people. Luxembourg's nicotine policy is a calculation with many unknowns. How long can it work?
It's a long time since clothes smelled of smoke long after a visit to the pub. Smoking in public places seems to have become less common. But appearances are deceptive: Luxembourg is one of the countries where the number of people taking nicotine is on the rise again after a long time. What is a short-term source of income for the state may become even more expensive for us in the future than it already is.
"People think: it's everyone's responsibility to get sick because they smoke. But it costs us all. This is about collectivity and the welfare state." Lex Schaul is a tobaccologist and public health specialist at the Fondation Cancer – and is critical of the announcement by Finance Minister Gilles Roth (CSV) that Luxembourg's state income will be even more dependent on the nicotine tax. This is because the calculation, as it is often presented, does not add up – especially in times when the health insurance fund is already groaning.
The net question
1.42 billion euros are to be flushed into the state coffers next year through tobacco excise duty, which is 5.2 per cent of total revenue. However, this does not include the expenditure side. The Luxembourg Court of Audit estimates the economic costs of tobacco consumption for Luxembourg at around 859 million euros per year, both for direct treatment costs and for loss of productivity and premature deaths. This leaves a balance of around 561 million euros in revenue – just two per cent of total revenue.
But even this calculation is potentially generous, according to Schaul. Comparisons with other countries show that the final balance for the state coffers is almost always negative: In 2024, Germany collected around 19 billion euros in tax revenue from tobacco and nicotine products. This does not include the (dwindling) jobs in the tobacco industry. And on the expenditure side? "According to the German Centre for Addiction Issues, around 97 billion is spent on tobacco. Of this, 30 billion is direct expenditure and around 67 billion is indirect costs. These are enormously high sums, " says Schaul. According to the expert, this calculation also illustrates the moral imbalance of the Luxembourg model.
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