'Budget Deficit' Germany to Significantly Raise Tobacco Tax... Pack to Hit 20,000 Won by 2030

The German government, under pressure from a budget deficit, has decided to significantly raise tobacco taxes to fill the fiscal gap.

No Smoking Sign

According to local media outlet RND on the 13th (local time), the Federal Ministry of Finance intends to gradually increase the tobacco tax, currently set at 4 euros (about 6,828 won) per pack, to 6.19 euros (about 10,568 won) by 2030. This represents an increase of about 40% compared to the German government’s original plan.

As a result, the average retail price of a pack of cigarettes is expected to soar to 9.10 euros (about 15,535 won) next year, 9.91 euros (about 16,918 won) in 2028, and up to 11.78 euros (about 20,111 won) in 2030.

According to RND’s report, the German government decided to supplement tax revenue through the tobacco tax after the scale of health insurance subsidy cuts pursued during the healthcare reform process turned out to be smaller than expected. With the tobacco tax increase, the government expects to secure an additional 800 million euros (about 1.37 trillion won) in annual tax revenue, and projects that by 2030, tax income will increase by 4.5 billion euros (about 7.68 trillion won) compared to the current level.

Additionally, the government plans to increase the liquor tax on distilled spirits—excluding beer and wine—by 20%, thereby raising an extra 450 million euros (about 770 billion won) per year.

The Federal Ministry of Finance’s budget plan for next year, finalized earlier this month, projects total expenditures at 555.4 billion euros (about 94.813 trillion won), an increase of 30.9 billion euros (5.9%) compared to this year. Notably, the regular defense budget, separate from the special funds allocated immediately after the outbreak of the war in Ukraine, was set at 109.7 billion euros (about 18.727 trillion won), marking a sharp 32.6% increase from this year.

When combining the Ukraine aid fund and the special infrastructure and climate protection funds—operated separately from the main budget—Germany’s new debt next year is estimated to reach 203.6 billion euros (about 34.757 trillion won).

A government official explained that this tobacco tax hike is also in line with the government’s health policy, aiming to promote public health and reduce smoking rates.

Meanwhile, according to Eurostat, the statistical office of the European Union (EU), the smoking rate among adult men in Germany was 28% in 2023, matching the EU average across 27 member countries. The smoking rate among adult women was 20%, 1 percentage point lower than the EU average.

This content was produced with the assistance of AI translation services.