Germany's coalition resolves tobacco tax dispute as cigarette prices set to rise

Germany's governing coalition has resolved its dispute over tobacco tax increases, with the Union faction dropping its resistance and agreeing to the stricter version of the legislation. Cigarette prices are expected to rise to 9.10 euros per pack in 2027. The amended proposal from CDU/CSU and SPD sets higher tax rates than the original government draft, though fine-cut tobacco prices will still be discussed before the final parliamentary vote. The tax increases are projected to generate 11.6 billion euros in additional state revenue over four years, with total tobacco tax income reaching 21.3 billion euros by 2030. Experts and politicians from multiple parties question these revenue forecasts, warning that consumers may shift to cheaper products, alternative nicotine items, or the illegal market. Customs union officials and industry representatives have highlighted significant black market risks that could reduce actual state earnings.