Price shock for smokers: Cigarette prices could rise rapidly!

Price shock for smokers: Cigarette prices could rise rapidly!

Smoking citizens in Germany could soon be confronted with drastically higher prices for cigarettes. According to the EU Commission's plans, a significant increase in tobacco taxes is in prospect. The price for a pack of branded cigarettes could rise from currently around 8.50 euros to over 12 euros. Fine-cut tobacco is also expected to rise from 10 euros to more than 18 euros. These measures are intended to reduce tobacco consumption, which is supported by health experts.

The planned minimum tax rate for cigarettes is to be increased from 90 euros to 215 euros per 1,000 cigarettes, while the minimum tax rate for fine-cut cigarettes could rise from 60 euros to 215 euros per kilo. Experts estimate that a 10% price increase could reduce tobacco consumption by around 4% in high-income countries. There are currently around 16 million smokers in Germany, with every fifth cigarette smoked coming from the black market or abroad. In Great Britain the proportion of illegal cigarettes is over 40 percent.

Price shock and illegal transactions

The tobacco industry is warning of a “price shock” that could potentially lead to an increase in illegal trade. Political concerns about increasing tobacco taxes seem justified, as experts fear a shift in the market into the shadow economy. The issue is particularly sensitive because the federal government collected 15.6 billion euros in tobacco taxes last year. Brussels plans to receive 15% of these national revenues, which is met with resistance in member states.

However, the EU Commission is also pursuing health policy goals with this measure. Higher cigarette prices could not only reduce smokers' purchasing power, but also reduce the overall attractiveness of smoking. This could cause tobacco companies to raise prices even further, leading to overall higher costs for consumers.

Risks to the market

The discussion about the tax increases and their effects remains emotionally charged. While health experts see increasing tobacco taxes as a necessary measure to combat tobacco consumption, others warn about the economic consequences and risks associated with an increase in illicit trade. Experts emphasize that higher prices could boost illegal cigarette sales and that politicians face the challenge of finding a balance between health protection and market regulation.

Overall, it remains to be seen how the discussion about the planned tax increases will progress and what measures the Member States will ultimately implement in order to reduce tobacco consumption and at the same time curb the illegal business.

For further information on the planned tax increases, read the reports t-online.de and Rundumdeutschland.de.