Smoking is set to become more expensive: the German federal government has initiated an increase in tobacco tax expected to bring the state treasury additional tax revenue in the billions. From January 1, 2027, annual tobacco tax increases are planned, which could raise the price of a pack of 20 cigarettes to over eleven euros by 2030. This is also intended to serve the protection of public health.
The draft law amending the Tobacco Tax Act, approved by the Cabinet in Berlin on Monday, provides that the tobacco tax on a so-called small retail pack of cigarettes containing 20 pieces will be 4.44 euros starting next year. According to the Federal Ministry of Finance, this corresponds to an average retail price of 8.77 euros per pack in 2027. The tobacco tax share will then increase gradually each year - to 6.32 euros in 2030, corresponding to a weighted average retail price of 11.01 euros per pack.
According to the government's draft law, taxes on fine-cut tobacco, pipe tobacco, and cigars or cigarillos will also rise annually. The same is set to apply to substitute products such as liquids for e-cigarettes - here, the tax share is set to increase annually by one cent per milliliter; following 0.33 euros in 2027, 0.36 euros per milliliter will be reached in 2030.
The tax increases are intended to benefit the state treasury in particular: "One of this federal government's central tasks is to consolidate the budget," explained a spokesperson for the Federal Ministry of Finance. "The federal government has therefore agreed on the key parameters to strengthen the revenue side."
Specifically, the higher tax rates are expected to mean additional tax revenue of an estimated 756 million euros in 2027. In line with the gradual increases, this will continue to rise in the following years - to 3.589 billion euros in 2030.
At the same time, the tobacco tax increase - already envisaged in the coalition agreement between the CDU/CSU and SPD - also aims to protect public health. The measure is "in line with the goal of reducing the smoking rate among young people and adults," the Ministry of Finance explained.
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