Tobacco tax revenue drops 15 percent in first half - industry warns of further hikes

Germany's tobacco tax revenues experienced a significant decline of 15 percent in the first half of 2026, amounting to 6.79 billion euros. This drop, reported by the Federal Ministry of Finance, follows a 15 cent increase per pack of cigarettes implemented at the beginning of the year.

The Federal Association of the Tobacco Industry and Novel Products (BVTE) interprets these figures as a signal that the legal market is reaching its tax limit. The association is strongly urging against further tax increases, citing potential negative consequences for state finances.

Jan Mücke, CEO of BVTE, stated that proposed tax hikes would be financially unsustainable. He indicated that a potential increase of 80 cents per pack could raise cigarette prices to nearly 12 euros by 2030, while the previous 15 cent increase already resulted in a 15 percent revenue shortfall. Mücke warned that excessive taxation weakens the legal market and fuels organized crime.

The BVTE pointed to France and the Netherlands as examples where tax increases have led to a rise in illegal tobacco consumption. In France, an estimated 17.7 percent of tobacco consumption evades national taxation. The association appeals to the government to reconsider planned tax hikes, emphasizing the need for stable state revenues and the protection of the regulated market from illicit trade.