BVTE Warns Higher Tobacco Taxes Will Boost Black Market
The German tobacco industry association (BVTE) warns that proposed tobacco tax increases are unlikely to generate expected revenues. Instead, the association predicts a rise in the black market and a decrease in tax income.
The German Federation for Tobacco Products and New Products (BVTE) has criticized proposed government plans to significantly raise tobacco taxes. The association argues that the planned tax hikes, which are expected to yield an additional €2.8 billion by the end of 2027, are unrealistic and likely to fuel an increase in illegal trade.
The BVTE bases its assessment on past experiences in Germany and across Europe. Sharp, short-term tax increases have previously led consumers to shift to the black market, resulting in lower actual tax revenues and destabilizing the legal market. According to the association, the share of untaxed cigarettes in the German market was already 20.9% in 2025, exceeding 40% in eastern Germany.
"This calculation will not work out. Forcing massive price increases in a short period risks shifting trade to the black market, leading to lower tax revenues in the end," stated BVTE Managing Director Jan Mücke.
The association also points out that an estimated €400 million in tax revenue is lost annually from currently unregulated nicotine pouches. BVTE advocates for more moderate and long-term tax adjustments that would avoid market destabilization and ensure steady revenues. Furthermore, higher taxes could jeopardize jobs and the industry's competitiveness.