Germany blinks: cigars and pipe tobacco get a much gentler tax hike
For a few months the German cigar trade has been bracing for the worst. A big overhaul of tobacco taxes was planned for 2027 to 2030, and the early proposal would have multiplied the ad valorem rate on cigars about fourteen times over. This week there is finally some good news.
According to a report citing Bild, the governing CDU/CSU parties have agreed on a softened version. The ad valorem rate on cigars would go from 1.74 percent of the retail price to 3.83 percent, instead of the 21.05 percent that was floated before. By 2030 the specific duty is said to rise from 1.4 cents to 2.85 cents, and the minimum tax before VAT from 7.504 cents to 13.96 cents.
Pipe smokers are not off the hook, but they are spared the worst as well. Pipe tobacco would go from 26 euros per kilo to 71.50 euros, which is still well under half of the 172 euros that had been proposed.
Why does this matter beyond Germany? Because it is one of the most important cigar markets anywhere. Low taxes, transparent pricing and an open market make it a leading destination for both Cuban and non-Cuban cigars, and Habanos has described it as its fifth largest market. For many non-Cuban makers it sits in the top three outside the United States.
It is not final yet. The plan still has to be debated and approved in the Bundestag, and a finished bill is expected later next week. I will be watching that closely, but for now it is nice to see a tax fight end with something other than a disaster for smokers of cigars and pipes.
Source: halfwheel
According to a report citing Bild, the governing CDU/CSU parties have agreed on a softened version. The ad valorem rate on cigars would go from 1.74 percent of the retail price to 3.83 percent, instead of the 21.05 percent that was floated before. By 2030 the specific duty is said to rise from 1.4 cents to 2.85 cents, and the minimum tax before VAT from 7.504 cents to 13.96 cents.
Pipe smokers are not off the hook, but they are spared the worst as well. Pipe tobacco would go from 26 euros per kilo to 71.50 euros, which is still well under half of the 172 euros that had been proposed.
Why does this matter beyond Germany? Because it is one of the most important cigar markets anywhere. Low taxes, transparent pricing and an open market make it a leading destination for both Cuban and non-Cuban cigars, and Habanos has described it as its fifth largest market. For many non-Cuban makers it sits in the top three outside the United States.
It is not final yet. The plan still has to be debated and approved in the Bundestag, and a finished bill is expected later next week. I will be watching that closely, but for now it is nice to see a tax fight end with something other than a disaster for smokers of cigars and pipes.
Source: halfwheel
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