Tobacco Industry Association: Government Budget 2027 Based on Unrealistic Tax Revenue Projections

Berlin – The German Tobacco Industry and New Products Association (BVTE) has strongly criticized the government's draft budget for 2027 and the accompanying amendment to the Tobacco Tax Act. The association claims the government is basing its budget on uncertain tax revenues that are unlikely to materialize.

According to BVTE, the government expects significant additional revenue from tobacco taxes, projecting up to €1.5 billion for 2027. BVTE's CEO, Jan Mücke, described these revenues as "phantom bookings" and stated that the budget is built on unrealistic assumptions. "The government is building its budget on sandcastles; these billions will not come," Mücke said.

The association warns that the planned tax increases, which could push the price of a cigarette pack to over €13, will not only lead to substantial price hikes for consumers but also fuel the illicit market and smuggling. BVTE cites Germany's own experiences between 2002 and 2005, when similar tax hikes resulted in significant revenue shortfalls and a decline in legal sales.

BVTE forecasts that the government's plans could lead to revenue shortfalls of approximately €3.2 billion by 2030, contrary to the government's projected increase of €8.8 billion. The association advocates for fact-based tax policy and warns that weakening the legal market inevitably strengthens the illegal trade. The organization calls for a significant revision of the budget proposal during the parliamentary process.

Furthermore, BVTE criticizes the government's procedural methods. The association stated that the short 23-hour deadline for feedback from affected industries and associations did not allow for adequate preparation. "Such decision-making is neither transparent nor in line with the rule of law," Mücke concluded.