The paper analyzes the policy of taxation of tobacco products in the European Union in relation to Bosnia and Herzegovina. The continuous growth of excise taxes, and thus the retail prices of cigarettes, leads to the polarization of consumers into a group with lower incomes, whose demand is elastic and thus largely depends on the rise in cigarette prices, and a group with higher incomes, whose demand is inelastic and less susceptible to price changes. A large drop in cigarette consumption led to a drop in excise revenue, which even a reduction in the excise burden could not alleviate. Mass migrations of the working-age population from the new member states to the developed member states of the European Union significantly contribute to the decline in cigarette consumption in the new member states of the European Union. The current excise policy in the European Union in the sphere of taxation of tobacco products implies minimum standards of taxation. This includes the application of the compound excise rate, which implies the application of both ad valorem excise and specific excise, then the application of the reference price of cigarettes, which is the basis for determining the fulfillment of minimum standards and defining the amount of excise duty on cigarettes as the minimum standard of cigarette taxation. An overview of the structure of the tax burden on cigarettes in the member states of the European Union shows the different emphases of the excise policies of the member states. The structure of the tax burden in Bosnia and Herzegovina shows an emphasis on the ad valorem component (ad valorem excise duty + VAT), but it is also balanced with regard to extreme policies. It can be said that the low rate of VAT in Bosnia and Herzegovina also serves as a corrective to the high excise burden on cigarettes, which originates from ad valorem taxes. Given that there are no announcements of an increase in excise duty rates on cigarettes in Bosnia and Herzegovina, it is realistic to expect a continuation of the trend of reducing the total tax burden on cigarettes in Bosnia and Herzegovina in the coming years. It can be concluded that the consequences of the ambivalent policy of the member states on the collection of excise revenue are divergent. Bearing in mind the different goals of taxation in the member states, which are in conflict with each other, it will be difficult to reach a consensus in the discussions that are being held in connection with the redefinition of the existing minimum standards of cigarette taxation in the European Union.