Federal Cabinet Approves Tax Increase on Spirits, Sparkling Wine and Alcopops

Planned Increase in Detail

The increases are to be regulated in a companion law to the 2027 federal budget. The cabinet initiated the draft on Monday. According to the Finance Ministry, the federal government is also pursuing public health policy objectives with the increase.

A decline in consumption is to be expected, which could prevent approximately 1,000 cancer cases per year. In addition, the Health Ministry recommended three annual increases from 2027 to 2029 to gradually reinforce the effect. The federal government is also planning higher levies on tobacco.

Public Health Rationale

The tax increase applies to spirits, champagne and sparkling wine, as well as to liqueur wines and alcopops. The taxes on champagne, sparkling wine, liqueur wines and alcopops are also to be raised at the beginning of 2027. The government is thereby following a line that had been repeatedly demanded by health experts in recent years.

Other beverages remain exempt from the increase: wine will continue to be tax-free, and the beer tax is not to be raised. The measure is thus focused on beverages with particularly high alcohol content as well as on sugary mixed drinks.

Beer and Wine Remain Exempt

Starting in 2028, a sugar tax is also to be levied on beverages such as lemonades and colas. The federal government is thereby extending its plans beyond alcoholic products to sugary soft drinks.

Sugar Tax from 2028

The promotion of healthier lifestyles is, from the Health Ministry's perspective, an important component of the legislative initiative. The Finance Ministry, by contrast, emphasizes the budgetary aspect. Both ministries point to the additional revenues and the expected positive effects on public health.

The draft bill must still pass through the Bundestag and the Bundesrat before it can enter into force. Observers expect intense debates about the burden on consumers and about the effects on the domestic beverage industry.