Tobacco tax hike plan criticized for fostering black market

The German Association of the Tobacco Industry and Novel Products (BVTE) and its initiative "Tobacco taxation with good judgment" are criticizing the federal government's plans for substantial increases in tobacco taxes. The group warns that these hikes will not only burden consumers and legal trade but also boost the illegal market and organized crime.

"Tax policy with good judgment must consider what happens when legal products become increasingly unattractive," stated Jan Mücke, spokesperson for the initiative and BVTE. The BDZ, a German customs and finance union, echoed these concerns, calling the planned tax increase a "stimulus package for organized crime."

The initiative outlines five key reasons to reconsider the tax hikes: uncertain impacts on the federal budget, the risk of a growing black market, additional burdens on consumers, strain on legal retailers, and the necessity of a stable legal market for effective control. The current plan, which aims to raise the price of a cigarette pack to approximately 12 euros by 2030, is criticized for prioritizing short-term revenue over long-term consequences.

BVTE also advocates for a differentiated tax approach based on product characteristics and risk profiles, rather than a blanket approach to all tobacco and nicotine products. The initiative further highlights the lack of regulation for nicotine pouches in Germany, suggesting that a regulated market could generate an estimated 400-500 million euros in annual tax revenue while improving consumer protection.

The association emphasizes that effective youth protection and harm reduction are not incompatible with moderate tobacco tax policies. Instead, they argue that repeated and unpredictable tax increases hinder planning for businesses and can be perceived as socially unjust for consumers.