The ruling coalition intends to raise the tobacco tax even higher than initially projected. This new direction, which emerged from a drafting guide provided by the Federal Ministry of Finance to the coalition factions, reportedly signals a change in the planned ascent of cigarette prices.
According to the document, the cost of a pack of cigarettes is now slated to increase gradually, rising from the current price of around €8 to nearly €12 by 2030. This adjustment amounts to approximately €0.40 more than the price package approved by the Federal Cabinet last Monday. Furthermore, the taxation of “feinschnitt” – loose tobacco used for rolling own cigarettes – will also be intensified.
The reason for this change stems from the coalition parties’ decision not to reduce the tax subsidy for public health insurance providers as dramatically as previously planned within the framework of the health savings package. Consequently, the budget for Federal Finance Minister Lars Klingbeil (SPD) will now face a funding shortfall starting in 2027. This modification is expected to inject an additional 800 million euros into the federal coffers annually compared to prior projections. Overall, the stepped increase in the tobacco tax through 2030 is set to boost tax revenue by almost 4.5 billion euros.
Government circles noted that this “moderate increase” serves not only for fiscal consolidation. It is also intended to “protect public health” and align with the government’s objective of reducing smoking rates among both young and adult populations. While the original experts’ commission used to prepare the health savings package had proposed an even sharper increase, the current planned amendment by the coalition factions emphasizes the public health aspect.
Specifically, the average pack price for cigarettes is recalculated as follows: it is expected to reach €9.10 in 2027 (up from the planned €8.77), €9.91 in 2028 (up from €9.56), €10.81 in 2029 (up from €10.42), and €11.78 in 2030 (up from €11.36). Separately, the proportion of the price coming from the tobacco tax will rise from roughly €4 currently to €6.19 by 2030.
