Coalition plans significantly larger tobacco tax increase by 2030

Background to the tax plans

From government circles it was said according to the report that the "maßvolle Anhebung" serves not only budget consolidation but also the protection of public health. Literally, according to the RND report, the measure is also in line with the goal of the federal government to reduce the smoking rate among young people and adults.

"Die Erhöhung dient auch dem Schutz der öffentlichen Gesundheit und steht im Einklang mit dem Ziel der Bundesregierung, die Raucherquote von Jugendlichen und Erwachsenen zu senken", government representatives explained. Specifically, the higher tax rates mean estimated additional tax revenues of 756 million euros in 2027.

The reason for the change is, according to the media report, a gap in the budget. The additional revenues are, among other things, intended to help close this gap while pursuing health policy goals.

Impact on budget and society

According to the plans, tax revenues from tobacco are to continue rising in the following years – to an estimated 3.589 billion euros in 2030. This would significantly increase the tobacco tax's contribution to budget consolidation.

The RND newspapers based their report on a drafting aid from the Federal Ministry of Finance, which was prepared for the coalition parliamentary groups. The original source of the report is the news agency AFP.

The black-red coalition consists of CDU/CSU and SPD. The drafting aid now presented provides for the tobacco tax increase to take place gradually in order to cushion price jumps for consumers. Observers expect that the legislative process will be debated in the Bundestag and Bundesrat in the coming months.

Health policy objectives

Critics have long warned of the health consequences of smoking and therefore favor higher tobacco prices. Supporters of the tax plans point out that rising prices can deter young people in particular from taking up smoking. Health organizations have repeatedly called for significantly higher prices in the past.

With the increase, the federal government is simultaneously pursuing a dual goal: shoring up the federal budget and reducing the smoking rate. Whether the planned tax rates will actually come into force in this form depends on the further legislative process.

The original report comes from the news agency AFP. Tobacco tax increases had been adjusted several times in recent years, with the federal government having chosen the gradual approach in order to mitigate the effects on low-income households.