How Should Tobacco Be Taxed in EU-Accession Countries?

Ten Central and Eastern European countries, as well as Cyprus and Malta, have applied for membership of the European Union. Membership involves, among others, alignment of the taxes on tobacco products. Within the acquis communautaire, accession countries can choose between a predominantly specific and a predominantly ad valorem excise regime. The choice affects revenue, tobacco consumption control, and EU competition. This paper examines the arguments and concludes that a predominantly specific regime seems to be the preferred choice.