Germany: Tobacco products included in upcoming VAT cut
June 26, 2020
Par: communication@cnct.fr
Dernière mise à jour: June 26, 2020
Temps de lecture: 3 minutes
On Wednesday, June 24, the German government adopted an economic recovery plan to support consumption and assist certain sectors affected by the COVID-19 pandemic. Among the measures adopted, Berlin is proposing a temporary reduction in Value Added Tax (VAT) by three percentage points, from 19 to 16%, including tobacco products.
Health nonsense
On the tobacco issue, this measure is in total opposition to the interests of public health. A reduction in taxes and a reduction in tobacco prices can only be accompanied by an increase in the consumption of tobacco products. This measure also proves to be a social injustice: greater accessibility to tobacco through lower prices primarily impacts disadvantaged groups and young people, who are more sensitive to the price argument.
A shortfall in public revenue
By definition, reducing the VAT rate on tobacco products will result in a decrease in tax revenue. This measure is all the more surprising when we consider that the cost of tobacco represents more than 58 billion euros per year.[1], including both health costs and productivity losses linked to the health effects of smoking.
Germany, a poor European student in the fight against smoking
While tobacco continues to cause the deaths of more than 120,000 people in Germany, a revival of tobacco consumption appears to be an anomaly. This is because Germany is lagging far behind in terms of tobacco regulation: the influence of tobacco lobbies is particularly strong there. For example, LobbyControl revealed in 2016 that Philip Morris had paid €544,000 to several German parties.[2]. To this day, advertising for tobacco products is still permitted in the country, and it was not until December 2019 that the CDU/CSU, the majority bloc in Germany, pronounces for the banning of this advertising. However, the latter has been staggered until 2024, giving the tobacco industry a particularly long period of time to adapt to the new restrictions.
[1]Tobacco Atlas, Country Sheet: Germany
https://tobaccoatlas.org/country/germany/
[2] LobbyControl, “Wie der Tabakkonzern Philip Morris die Parteien sponsert”, December 5, 2016
