Germany Raises Taxes on Cigarettes, Sugary Drinks and Alcohol

Germany is planning to raise taxes on tobacco products, sugary drinks, and certain types of alcohol. The changes aim, on one hand, to boost state budget revenues, and on the other, to improve public health.

On Thursday, lawmakers backed an increase in the tobacco tax. The measure is expected to generate more than 12 billion euros in revenue between 2027 and 2030. As a result of the changes, the average price of a pack of cigarettes will exceed 11 euros by the end of the decade.

The tax on sugary drinks will take effect in July 2027. The German government approved the corresponding decision on Wednesday. The tax will apply to soft drinks containing at least 5 grams of sugar per 100 milliliters. For such beverages, the tax will be 0.26 euros per liter, while the rate for products with higher sugar content will rise to 0.32 euros.

According to the Ministry of Finance's forecast, the sugar tax will bring in 690 million euros in 2027 and 925 million euros in 2028. The revenue collected will be used to partially offset the shortfall caused by reduced federal health insurance subsidies.

According to the ministry's estimates, health problems linked to the consumption of sugary drinks cost Germany's healthcare system around 2.1 billion euros annually.

Starting in 2027, Germany also plans to raise taxes on certain types of alcoholic beverages by 20%. The change will affect spirits, sparkling wine, and so-called alcopops — sweet, ready-made alcoholic cocktails. This measure is expected to bring in additional revenue of hundreds of millions of euros for the budget. At the same time, taxes on beer and regular, still wine will remain unchanged.

However, opposition parties have criticized the increase in the tobacco tax. In their assessment, the change will place an additional financial burden on consumers and could contribute to the expansion of the illegal market.

Similar measures are being discussed or already being implemented in other European countries. The United Kingdom has decided to expand the scope of its sugary drinks tax and plans to lower the threshold above which a beverage becomes subject to taxation. France, meanwhile, is gradually raising taxes on tobacco, aiming to bring the price of a pack of cigarettes to around 13 euros by 2027.

Germany's tax on sparkling wine, the Sektsteuer, has a long history. It was introduced in 1902 and has survived to this day despite the fall of the German Empire, two world wars, and numerous changes in government.