Germany tobacco industry warns of price surges due to tax hikes

The German tobacco industry is warning of significant economic consequences following proposed tax increases by the federal government to address budget deficits. At the Intertabac trade fair in Dortmund, industry representatives expressed concern that the planned hikes could lead to a “tax explosion.”

For cigar and cigarillo manufacturers, Bodo Mehrlein of the German Cigar Industry Association warns that prices could rise by 50 to 60 percent, potentially causing a sharp decline in demand. This comes at a time when the sector is already facing a 6 to 7 percent drop in revenue due to the general economic climate.

Regarding cigarettes, the BVTE industry association warns that drastic tax hikes could drive consumers toward the black market, describing the expected revenue increases as “castles in the air” and a potential boost for organized crime. Proposed plans suggest cigarette pack prices could rise significantly, potentially reaching 9.10 euros next year and up to 11.78 euros by 2030. Labor unions and customs officials have also voiced concerns, suggesting the measures are a desperate attempt to fill budget gaps rather than a sound fiscal policy.