Germany plans sharper tobacco tax hikes, pushing cigarette pack to 11.78 euros by 2030

What the new plan entails

Germany's governing coalition is drafting a sharper increase in tobacco tax than the version the federal cabinet passed the previous week. A drafting guide from the finance ministry, cited by Redaktionsnetzwerk Deutschland (RND) newspapers, lays out a stepped path: an average pack price of 9.10 euros in 2027, rising to 9.91 euros in 2028, 10.81 euros in 2029, and 11.78 euros in 2030. The tax component on a pack would climb from roughly 4 euros today to 6.19 euros in 2030. The latest numbers are about 40 cents above the cabinet's recent decision and would see a pack of 20 brand-name cigarettes reach 13 to 14 euros, according to industry estimates, compared with 9.40 euros for some brands at present.

Fine-cut tobacco for hand-rolled cigarettes will also be taxed more heavily under the proposal, and the tax share on e-cigarette liquids is set to rise by one cent per millilitre each year. Pipe tobacco, cigars, and cigarillos face similar annual increases.

The government's rationale

Government sources described the measure to RND as a "moderate increase" that serves both budget consolidation and public health. The finance ministry projects the steeper schedule will double the additional annual revenue initially foreseen, producing around 756 million euros in extra receipts in 2027. The yearly uplift then climbs further, reaching 3.589 billion euros in 2030. By that year the total tobacco-tax take could hit roughly 21 billion euros. Officials link the policy to the federal government's target of lowering smoking prevalence among young people and adults.

The increase also serves to protect public health and is in line with the federal government's aim of reducing smoking rates among young people and adults.

Industry pushes back

Tobacco firms and their lobby group, the BVTE, dismiss the revenue forecasts as unrealistic. Jan Mücke, the BVTE's chief executive, said the planned extra income is "pure fantasy" and that higher prices will push smokers to illicit channels.

The federal government is planning with additional revenues that are pure fantasy; none of it will become reality. The tax increase would be an economic stimulus programme for organised crime.

Christian Cordes of Reemtsma warned that legal packs are becoming markedly more expensive while cheap, untaxed products from bootleg sources and from abroad are growing their share. He pointed to France and the Netherlands as examples where the legal market has effectively collapsed and cross-border plus illegal trade is booming. The BVTE notes that after a 15-cent tax rise at the start of the year, federal tobacco-tax receipts reached only 5.2 billion euros by mid-year, down from 17.6 billion euros in all of 2024. The industry argues that the 2024 total will not be matched in 2026, and a heavier tax load will continue the downward slide in state revenue.

Health advocates and the cost equation

Cancer researchers welcome the higher levies. Katrin Schaller from the German Cancer Research Centre (DKFZ) backs the policy, pointing to the enormous economic harm from smoking. The 2025 "Tabakatlas" put the direct and indirect costs of smoking in Germany at 97.2 billion euros, arising from hospital treatment, lost labour-market participation, and passive-smoking damage. In contrast, 2024 tobacco-tax revenue stood at just 15.6 billion euros. About a quarter of Germans aged 15 and older smoke regularly, according to Eurostat.

A contradiction at the heart of the policy

Commentaries in several outlets note a tension in the government's approach. On one side, the coalition justifies the tax as a health measure that should reduce the number of smokers. On the other, it is counting on steadily rising tobacco-tax proceeds to close a budget shortfall for Finance Minister Lars Klingbeil. If the health goal succeeds, receipts would, logically, eventually stagnate or fall. Critics argue that relying on permanent increases in smoking-tax income implies a permanent reliance on a large smoking population, and that the government should pair price hikes with stronger prevention efforts, particularly given the popularity of disposable e-cigarettes among minors.