For many years the tobacco tax was not a big issue in politics.

The last major tax increase to date goes back to 2015.

But now everything should go very quickly.

The new tobacco tax law presented by the Federal Ministry of Finance in February is currently being pushed through the institutions in an urgent manner.

This week it is on the agenda for the first reading in the Bundestag, at the beginning of May the Bundesrat is to deal with it for the first time and the vote of the Bundestag members is planned at the latest in the last week of this legislative period at the end of June.

The law contains some explosives.

In addition to moderate increases in the tax on tobacco cigarettes, the main innovation is the introduction of a generous levy on liquids for e-cigarettes.

If it comes to that, Germany would be by far the most expensive country for e-cigarette vapers in the European Union.


The single-portion bottles would increase in price from around five euros today to nine euros and then 13 euros.

On the other hand, there is now resistance from an unusual alliance: Sections of the governing coalition, opposition and police union are all pulling together.

In detail, this is the content of the tobacco tax law: The plans for the classic tobacco cigarette are rather unspectacular.

Here, the lead Federal Ministry of Finance wants to raise the tax in the five years from 2022 to 2026 on average by around eight cents a year for a pack of 20 cigarettes.

Even with fine-cut tobacco, which is becoming increasingly popular among smokers, the increases are manageable.

For example, the levy for a 40-gram fine-cut package is expected to rise by an average of around 13 to 16 cents per year.

The price per hand-rolled cigarette would then be around twelve cents, just one cent above today's level.

Source: WORLD infographic


However, the control plans look completely different for the new electronic smoke variants.

So-called heat-not-burn products, i.e. tobacco heaters like the Iqos brand of market leader Philip Morris, are to be taxed in the same way as classic tobacco cigarettes.

So far, the significantly lower tax rate for pipe tobacco has applied to them.

This will roughly triple taxation.

Most affected by changes are nicotine-containing liquids for e-cigarettes.

From July 2022, a tax of initially two cents per milligram of nicotine and then four cents per milligram from 2024 will be taxed.

The sales prices for a standard bottle with ten milliliters content and the maximum permitted nicotine content would increase by around four euros each.

Lobbyists from the e-cigarette industry fear that customers in other European countries will then get the liquid bottles via online shops.

That would also be conceivable for the tobacco strips for the tobacco heater.

Tobacco tourism to Poland


This argument is now being reinforced by the Police Union.

Their customs district group cites this calculation example after the tax increase: “At an assumed price of ten euros, the costs per unit in Germany are almost seven euros higher than in neighboring Poland, for example.

There the product is sold for 3.15 euros, ”writes the union.

Such price differences would not only mobilize “price-conscious excursionists” who “generously expand their conception of free amounts” to get the products cheaper in neighboring countries.

“Criminal perpetrator organizations are also triggered,” writes the police union.

However, the concerns extend further.

Criticism is directed at the work of the customs authorities.

"As long as customs do not have the necessary self-image to seriously want to be the police in order to put an end to medium-sized, serious and organized crime, such tax increases are welcome start-ups for smugglers, smugglers and counterfeiters," it says further.

This would result in “new profit options with the lowest risk of discovery”.

In fact, at least online shopping across EU borders is likely to increase by leaps and bounds if Germany decides to levy such high taxes on these products.

So far there are no taxes on liquids in France, the largest market for e-cigarettes in Europe.

The price difference would be huge after the introduction of the law.

The neighboring country of Italy has had similar experiences.

When the government introduced a high tax on liquids, shopping shifted to foreign online shops.

A few months later, Italian health policy withdrew the increase and replaced it with a much more moderate increase.

Currently there is only a few EU countries with a tax on liquids

In any case, some EU countries are currently waiting on the subject.

Because in autumn the EU Commission wants to set a minimum tax on the nicotine content of e-cigarettes as part of the common tobacco directive.

The federal states would then no longer be allowed to fall below this tax level - on the other hand they could very well exceed the target.

Currently there is only a few EU countries with a tax on liquids.

A list by the World Bank of several examples results in an average tax amount of 15 cents per milliliter of liquid with nicotine content.

The most expensive countries in this area are Finland and Portugal, where the tax burden is three euros per standard portion bottle - and therefore not far from the four euros in the first step in Germany.

All other sample countries are far below.


Now, however, there is resistance in the governing coalition to some of the plans. "The tax increases for the less harmful tobacco products should be only half as high as planned in the cabinet draft," said Sebastian Brehm, member of the Bundestag and financial and budgetary spokesman for the CSU, the "Tagesspiegel". The draft from the Ministry of Finance is "not approvable" because it will neither bring the promised steering effect nor the hoped-for additional tax revenue. The financial policy spokeswoman for the CDU / CSU parliamentary group, Antje Tillmann, has a similar view.

In the opposition party FDP there is talk of an "adventurous pace" with which the Federal Ministry of Finance wants to push through the law.

"Too high a tax on e-cigarettes is counterproductive and only brings smokers back to the classic tobacco cigarette," says Gero Hocker, spokesman for the FDP parliamentary group in the Committee on Agriculture and Food, in the WELT interview.

Risk to medium-sized industries

The product should be viewed as a sensible alternative for smokers and taxed moderately. "In terms of taxation, there must be a distance between e-cigarettes and tobacco cigarettes that is based on the potential health risks," says Hocker. Above all, an offer that is "demonstrably less harmful than a conventional cigarette" should not be discredited by the new tobacco tax. The Green MP, Stefan Schmidt, who is a member of the finance committee, calls for the variants to be taxed according to the principle that “the more harmful the product, the higher the tax”.

Doctors from the German Cancer Research Center in Heidelberg have confirmed in earlier statements that the consumption of e-cigarettes is less harmful to health than smoking a tobacco cigarette. This is essentially due to the fact that no tobacco is burned in an e-cigarette vaporizer and therefore no tar is released. With nicotine-containing liquids, on the other hand, there are health concerns up to dependency and risk of addiction.

As expected, the cigarette industry itself speaks of “devastating consequences”. The existence of the rather medium-sized e-cigarette trade is threatened, says Dustin Dahlmann from the Alliance for Tobacco-Free Enjoyment. In fact, the 3,000 or so e-cigarette shops are often very small businesses. If only the market for liquids is considered, the dealers arrive at an annual turnover of 135 million euros.

A large part of it will migrate to the black market, says association boss and entrepreneur Dahlmann. The big tobacco companies are noticeably reluctant to make statements. Although they are also represented in this niche business, they only achieve low sales figures. Marlboro seller Philip Morris or Lucky Strike manufacturer BAT still come from tobacco cigarettes as the main source of income. Big Tobacco, as the market leaders are called, remains around half of one euro turnover as pre-tax profit.

“Everything on stocks” is the daily stock market shot from the WELT business editorial team. Every morning from 7 a.m. with the financial journalists from WELT. For stock market experts and beginners.

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