Tax increases on tobacco and nicotine products in Germany

In Germany, after more than five years without an increase, parliament approved a tax increase on tobacco, heated tobacco, and e-cigarettes. These tax increases, although limited, met with opposition from the tobacco and nicotine industries.[1].

Members of the Bundestag have decided to increase the tax on a pack of 20 cigarettes by 10 cents for the current year and next year. In 2025 and 2026, this increase will rise to 15 cents. This increase is therefore higher than the one initially proposed by the federal government. According to the German newspaper Die Zeit, this tax increase is expected to be approved by the Federal Council on Friday, June 25.

A very limited increase in tobacco prices

Although higher than expected, this increase in tobacco taxes remains particularly limited. While tax increases are the most effective and cost-effective lever for combating smoking, they must be regular and significant. Below a certain threshold, increasing the price of cigarettes does not reduce consumption, thus penalizing the purchasing power of the most vulnerable smokers, without significant benefit to public health. It is precisely for this reason that the tobacco industry is lobbying to block, on principle, any tax increase, even limited, which prevents it from increasing its profit margins, and even more so large tax increases, which penalize it by reducing consumption.

An increase in all tobacco and nicotine products

This tax increase also affects all tobacco and nicotine products. E-cigarette liquid, for example, currently costs around €5 for a 10-milliliter bottle. The associated tax is expected to exceed €1.60 in 2022 and €3.20 in 2026. Heated tobacco products will also be subject to higher taxation. These tax increases have met with hostility from manufacturers, who claim that the lower toxicity levels of these products should be accompanied by preferential taxation. However, no independent study has yet demonstrated that the consumption of heated tobacco is less harmful to health than that of manufactured cigarettes. For its part, the Alliance for Tobacco Outdoor Enjoyment, an industry front group, has declared that it intends to appeal to the Constitutional Court to protest this "disproportionate tax increase."

The strong influence of the tobacco industry in Germany

In the fight against smoking, Germany is characterized by his worrying situation. As mentioned above, no significant tax increases have been implemented for several years. In 2007, the average pack cost 5.90 euros, compared to 6.77 in 2018. Until a few months ago, Germany allowed tobacco advertising on billboards. The ban, implemented from September 2020, includes long transition periods. Furthermore, regulations on tobacco- and smoke-free spaces remain very lacking today; graphic health warnings were only introduced following the 2014 European directive, while plain packaging is not on the agenda. This situation, due to the strong influence of the tobacco industry on public decision-makers, results in a considerable human cost: every year, 127,000 people die from smoking in Germany[2].

FT

Keywords: Germany, Taxes, Interference, Lobbying

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[1] Zeit Online, Zigaretten und E-Zigaretten werden teurer, 06/11/2021, (accessed 06/14/2021)

[2] German Cancer Research Center, Schaller, Katrin & Kahnert, Sarah & Graen, Laura & Mons, Ute & Ouedraogo, Nobila. (2020). Tobacco Atlas Germany 2020

National Committee Against Smoking |