Germany approves a tobacco tax increase that will lift cigarette packs to €9.56 next year

Germany’s federal government is moving ahead with a new round of taxes on tobacco, alcohol, sugary drinks and plastic packaging as it tries to raise revenue and steer consumers toward healthier choices, though not all of the measures have cleared parliament.

The clearest step so far came on tobacco. The Bundestag approved a staged increase overnight that would lift the average price of a pack of 20 cigarettes from €8.77 to €9.56 next year, according to the draft law. By 2030, the average price could reach €11.36. Tobacco tax already accounts for about 45%-50% of the retail price of a pack. The government expects the increase to bring in an additional €756 million next year and €3.58 billion by 2030. If smoking levels were unchanged, total annual revenue linked to tobacco would be about €22 billion. Green finance lawmakers have said those figures are too high and have questioned whether the money would actually ease pressure on health insurers, noting that tax revenue goes into the general budget rather than being earmarked.

On alcohol, the government plans a 20% tax increase, but only for selected categories. The proposal covers spirits, sparkling wine and Champagne, fortified wines and alcopops. Beer would be excluded because it is taxed under a separate system, and still wine would remain untaxed for now under Germany’s excise rules. BR24 reported that a standard 0.75-liter bottle of sparkling wine would become about 24 cents more expensive under the plan.

The alcohol measure has not yet been passed by the Bundestag. The government expects it to generate €380 million in extra revenue in 2027. If approved, the increase would affect some of the most important categories for the drinks trade in Germany. That could put pressure on prices and margins for producers, importers and retailers if companies decide to absorb part of the higher tax, and it could also weigh on demand if consumers pull back in one of Europe’s largest beverage markets.

The government has also approved what would be Germany’s first tax on sugary drinks after a long internal debate. Under the plan, a levy of 26 cents per liter would apply from July 1, 2027, to sweetened beverages with at least five grams of sugar per 100 milliliters. For drinks with eight grams per 100 milliliters, the rate would rise to 32 cents per liter. BR24 said a standard can of cola priced at 99 cents would cost about €1.10 if manufacturers do not lower the sugar content. A higher tax band for drinks with at least 10 grams of sugar was dropped. Smaller producers with annual soda output of up to one million liters would be exempt. The government estimates the tax would raise €690 million in 2027 and €1.2 billion in 2028. The measure still needs to be debated by the Bundestag.

Another proposal would tax plastic used in packaging. Starting in July 2027, companies would pay €550 for each ton of plastic in packaging under the draft law. Plastic packaging, plastic films and composite packaging would be taxed if the plastic share is more than 5%. Packaging made from recycled plastic could be exempt if companies apply for that treatment. The government expects the measure to raise €805 million in 2027.

Business groups have pushed back against the plastic tax, and the conservative CDU/CSU bloc in the Bundestag has said the draft is not acceptable in its current form. Its adoption has been delayed. For beverage companies, that proposal could add another layer of cost because drinks rely heavily on bottles, films, labels and composite packaging, even where the tax is aimed at encouraging less plastic use.

The government says the package is meant in part to encourage healthier behavior and reduce long-term health costs. At the same time, the revenue targets show Berlin is not counting on a rapid shift in consumer habits. Finance Minister Lars Klingbeil has said the budget gap for next year has been closed, but planning through 2030 still shows a funding gap of €107 billion. He has said fiscal consolidation must continue, and the new taxes on tobacco, alcohol and sugar are part of that effort.

The measures are moving on different tracks. Tobacco has already been approved by lawmakers. The alcohol and sugary drink taxes have been set out by the government but still require Bundestag debate and approval. That leaves uncertainty for companies and consumers, even as the direction of policy is becoming clearer: higher taxes on products Berlin sees as harmful to health or the environment, and new revenue streams for a strained federal budget.