Germany to Significantly Hike Tobacco Tax to Address Fiscal Deficit; Price to Reach 20,000 Won per Pack by 2030

The German government, struggling with a fiscal deficit, has decided to significantly increase tobacco taxes to cover budget shortfalls.

Local media outlet RND reported on July 13 (local time) that the Federal Ministry of Finance plans to gradually raise the tobacco tax, currently at 4 euros (6,828 won) per pack, to 6.19 euros (10,568 won) by 2030.

This represents a 40 percent increase over the government's original plan.

The average price of a pack of cigarettes is projected to be 9.10 euros (15,535 won) next year, 9.91 euros (16,918 won) in 2028, and 11.78 euros (20,111 won) by 2030.

RND reported that the government decided to secure tax revenue through tobacco taxes after the planned reduction in health insurance subsidies, which was part of healthcare reform, turned out to be smaller than initially expected.

The government estimates that raising the tobacco tax will increase tax revenue by approximately 800 million euros (about 1.37 trillion won) annually, reaching 4.5 billion euros (about 7.68 trillion won) more than current levels by 2030.

The government is also pushing for a 20 percent increase in the tax on distilled spirits, excluding beer and wine, to secure an additional 450 million euros (about 770 billion won) in annual tax revenue.

In the budget for next year, finalized earlier this month, the Ministry of Finance set total expenditures at 555.4 billion euros (about 948.13 trillion won), an increase of 30.9 billion euros (about 52.75 trillion won, or 5.9 percent) from this year.

Regular defense spending, excluding the special fund established at the beginning of the war in Ukraine, reached 109.7 billion euros (about 187.27 trillion won), a 32.6 percent increase from this year.

When combining the Ukraine support fund, which is used separately from the regular budget, with the infrastructure and climate protection special funds, new debt for next year is expected to reach 203.6 billion euros (about 347.57 trillion won).

A government official stated that the tobacco tax hike also aligns with the government's goal of protecting public health and lowering smoking rates.

According to Eurostat, the statistical office of the European Union, the smoking rate among adult men in Germany was 28 percent as of 2023, which was the average for the 27 member states.

The rate for women was 20 percent, 1 percentage point lower than the EU average.
※ Please note: This article was translated by AI and may contain errors.