Germany: Union and SPD propose higher tobacco tax increases

German coalition factions from the Union and SPD have submitted an amendment to the government's tobacco tax proposal, seeking significantly higher tax increases between 2027 and February 2031 than previously planned.

The amendment proposes raising the tax rate for cigarettes to 38.19 cents per unit by February 2031, surpassing the original plan of 35.8 cents by 2030. The proposed incremental increases include 29.49 cents in 2027, 32.15 cents in 2028, and 35.04 cents in 2029.

These changes are intended to boost federal tax revenue. In 2027, additional revenue is expected to reach approximately 1.5 billion euros, which is 766 million euros more than the initial cabinet draft. By 2030, additional revenues are projected to reach 4.4 billion euros, an increase of 846 million euros over previous estimates. The proposal also includes higher tax rates for cigars, cigarillos, fine-cut tobacco, and pipe tobacco.