Germany Set to Hike Tobacco Tax: Cigarette Packs Could Approach €12 by 2030

Germany's Federal Parliament (Bundestag) has voted to gradually increase tobacco taxes. This decision will lead to regular price hikes for cigarettes starting in 2027, with a standard pack potentially reaching around €11.36 by 2030. The government aims to generate an additional €12 billion in revenue over the next four years from these tax increases.

Highlights

• Cigarette prices in Germany are set to increase gradually from 2027.
• A standard pack of cigarettes could cost approximately €11.36 by 2030.
• The government anticipates an additional €12 billion in revenue over four years.
• The tobacco industry warns that higher taxes could boost the black market and illicit trade.
• The reform aims to both balance the budget and improve public health by deterring nicotine consumption.

Details

Currently, an average pack of 20 cigarettes in Germany costs around €8.05. Under the new regulations, this price is projected to rise to €8.77 in 2027, €9.56 in 2028, €10.42 in 2029, and €11.36 in 2030. Some premium brands could reach up to €14, while hand-rolling tobacco is also set to become significantly more expensive. German cigarette prices will thus gradually align with those in other European countries, though they are expected to remain below the most expensive markets like Ireland, France, and the Netherlands.

The government expects approximately €1.5 billion in additional revenue for 2027, increasing to €4.5 billion by 2030. Last year, tobacco duty generated €17.6 billion. However, tobacco industry representatives express concerns that higher taxes could push smokers towards the black market or cheaper cigarettes from other EU countries. Ingo Vogel, an SPD Member of Parliament, stated that the reform aims to contribute to budget balancing while also improving public health by making nicotine less attractive. Taxes on e-cigarette liquids were increased slightly more than initially expected.

Why it matters

This tax hike reflects Germany's dual objectives of increasing public revenue and reducing tobacco consumption. According to the German Cancer Research Centre, around 131,000 people died from tobacco-related illnesses in 2023. Health experts consider price increases an effective method to encourage people to quit smoking. However, warnings from the tobacco industry and some politicians about the risk of increased smuggling raise concerns that a rise in illicit trade could lead to both financial losses and a greater need to combat criminal networks.