Germany Approves Tobacco Tax Hike

The Bundestag on June 11 approved legislation to make smoking in Germany more expensive as of next year, reports Iamexpat. The tax on a pack of 20 cigarettes will rise by an average of €0.10 ($0.12) in 2021. A year later, a further €0.10 will be added, and in both 2025 and 2026, another €0.15 per pack will be added.

The greatest increases, however, have been reserved for e-cigarettes and tobacco-heating products, which were previously only lightly taxed.

Currently, a 10 mL bottle of vape liquid costs around €5 in Germany. In 2022, an extra €1.60 will be added to this price in taxation, and this will rise to €3.20 by 2026. An additional tax is also to be introduced for heated-tobacco, so that in the future, it will be treated similarly to cigarettes for tax purposes.

Vapor industry representatives slammed the tax hikes, arguing that their products contain significantly fewer harmful substances than tobacco cigarettes and should therefore be taxed at lower levels.

The Association of the E-Cigarette Trade (VdeH) warned that the move would not only prompt vapers to revert to smoking but also destroy numerous small and medium-sized businesses.

“The mere fact that e-cigarette liquids are generally taxed more heavily than tobacco cigarettes and thus ignore the 95 percent lower potential for damage is insane health policy,” said VdeH Managing Director Michal Dobrajc in a German-language statement. Taxing nicotine-free products as well as cigarettes defies common sense, he added.

Dobrajc said Germany should learn from the experience of other countries that were forced to lower their vapor taxes as vapers returned to smoking and anticipated revenues failed to materialize.

“The Tobacco Tax Modernization Act is a disaster in both health and economic terms,” said Dobrajc. “If you are serious about reducing the smoking rate, then you have to support the industry that is making a significant contribution to reducing it instead of destroying it.”

The Alliance for Tobacco-Free Enjoyment said that it intends to go to the Federal Constitutional Court to file a complaint against what it sees as a disproportionate tax increase.

Around one in four adults in Germany smokes regularly. Last year, tobacco taxes contributed approximately 14.7 billion to the government’s coffers. The last time the tobacco tax was increased was in 2015.