Germany: a slow and gradual increase in tobacco taxes, under pressure from the industry

The German federal government has submitted a bill to the Bundestag that would increase tobacco taxes annually from 2027 to 2030. The bill is initially presented as a fiscal consolidation measure. It is expected to generate an additional €3.6 billion in 2030 and raise the average price of a pack of cigarettes to €11.36. Three days before its first reading on September 24, 2026, the major tobacco manufacturers, along with their trade association, launched a campaign to limit the extent of the price increases. The reform comes in a country where tobacco consumption remains high and which lags behind in most tobacco control measures.

The draft law amends the German Tobacco Tax Act (Tabaksteuergesetz). The government submitted it to the Bundestag on September 7, 2026 (Drucksache 21/7859).[1]. It was sent to the Bundesrat on August 14th as a particularly urgent matter. The text proposes to increase the fixed portion and the minimum tax on January 1st each year, without affecting the proportional portion.

A multi-year trajectory guided primarily by budgetary objectives

The increase stems from the budget agreement of April 29, 2026, which includes it among the measures to consolidate federal finances. For cigarettes, the fixed portion will rise from 13.44 cents per cigarette in 2027 to 17.41 cents in 2030. The variable portion will remain at 20% of the retail price. The government forecasts a pack of 20 cigarettes will cost an average of €8.77 in 2027, including €4.44 in tobacco tax, and then €11.36 in 2030, including €5.75 in tax. Rolling tobacco will see a sharper increase in order to reduce the price gap with cigarettes. The tax on heated tobacco will remain at 80% of that on cigarettes. The tax on vaping liquids will increase from €0.33 to €0.36 per milliliter. The surcharge on shisha tobacco will remain unchanged. In total, the government expects €756 million in additional revenue in 2027 and €3.589 billion in 2030. The text has been referred to the Bundestag's Finance Committee, which is overseeing its review.[2].

Public health is only a secondary objective. The explanatory memorandum first cites the predictability of tax revenue, then a "balance" between stable revenue and public health. It also intends to "strengthen" the share of tobacco products purchased and taxed in Germany, to prevent them from being taxed abroad or on the illicit market. It is precisely this risk of sales leakage that leads the government to rule out a single, significant increase. The industry regularly uses this argument to oppose tax hikes. The text also acknowledges that Germany only moderately increased its taxes between 2011 and 2015, and then again between 2022 and 2026. Excluding adjustments for low-cost products, it did not raise them at all between 2016 and 2021. Over the same period, Belgium, Denmark, France, and the Netherlands significantly increased their taxes. In 2030, if the planned increases are applied, tobacco taxes and VAT would represent only about two-thirds of the price of a pack. This proportion is still far from the best practices recommended by the World Health Organization (WHO), which mentions at least 75% of the retail price allocated to taxation.

The tobacco industry is mobilizing to influence the text

On September 21, 2026, the German Tobacco Industry Association (BVTE) launched the "Tabaksteuer mit Augenmaß" (a tobacco tax "with moderation") initiative.[3]. The initiative brings together British American Tobacco, JT International, Philip Morris, and Reemtsma (a subsidiary of Imperial Brands), as well as federations of wholesalers and retailers. It presents the reform as a future "stimulus program for the black market." The initiative calls for smaller price increases, differentiated taxation based on the "risk profile" of products, and a legal framework for nicotine pouches. The BVTE (German Tobacco Products Association) estimates 1.5 million pouch users in Germany and potential tax revenue of 400 to 500 million euros per year.[4].

These arguments echo familiar tactics of the tobacco industry. While it regularly implements limited price increases to boost its profits, it cites the illicit market to curb tax hikes, which the WHO considers the most effective measure against smoking. It promises tax revenue to secure the legalization of new products, even though their sale is currently prohibited in Germany. Yet, a decrease in sales volume is precisely the desired effect of a public health policy. The explanatory memorandum claims that interest groups did not have a significant influence on the text. However, it reiterates the argument of the illicit market to preclude a larger increase. Article 5.3 of the WHO Framework Convention on Tobacco Control (FCTC) requires states to protect their health policies from industry interests. In the European Tobacco Control Scale 2025 ranking, Germany scores 0 out of 2 points for protection against industry interference.[5].

High tobacco consumption and a persistent delay in effective public health policies

In Germany, tobacco consumption remains high. According to the Federal Statistical Office, 19.1% of people aged 15 and over were smoking in 2025, a proportion virtually unchanged since 2021.[6]. Among 12-17 year olds, the proportion of smokers has even increased, rising from 6.1 per 100,000 in 2021 to 9.6 per 100,000 in 2025, according to the Federal Institute of Public Health[7]. Tobacco causes between 100,000 and 131,000 premature deaths per year, according to estimates. It costs the German economy 97.2 billion euros annually, including 30.3 billion euros in direct healthcare expenditures.

The Tobacco Control Scale 2025 ranks Germany 25th out of 37 European countries, with a score of 46 out of 100. The report highlights low tobacco prices and still highly visible advertising at points of sale, even though billboard advertising is now banned. As it stands, the proposed legislation would not close this gap, but its weakening due to industry lobbying could further worsen the situation.

©Generation Without Tobacco

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[1] German Bundestag, Gesetzentwurf der Bundesregierung: Entwurf eines Gesetzes zur Änderung des Tabaksteuergesetzes, Drucksache 21/7859, September 7, 2026, accessed September 25, 2026

[2] German Bundestag, Tabaksteuer soll vier lang regelmäßig erhöht werden, September 14, 2026, accessed on September 25, 2026.

[3] BVTE, Boom for the Schwarzmarkt statt Mehreinnahmen für Deutschland, press release, September 21, 2026, accessed September 25, 2026.

[4] 2Firsts, Germany's four-year tobacco tax plan heads to parliament as BAT, JTI and PMI push for changes, September 23, 2026, accessed on September 25, 2026.

[5] Joossens L., Abbink H., Roman E., The Tobacco Control Scale 2025 in Europe, May 20, 2026, accessed September 25, 2026.

[6] Federal Statistical Office, 19.1 % of menschen ab 15 days rauchen, May 26, 2026, accessed September 25, 2026.

[7] BIÖG, Weltnichtrauchertag 2026: Vapen bei Jugendlichen auf dem Vormarsch, May 26, 2026, accessed September 25, 2026.