Overview
- A Bundesfinanzministerium draft circulated in mid‑July proposes raising the tax share on cigars and zigarillos from 1.47% to 21.05% of retail price in four annual steps starting in 2027 and reaching the full level in 2030.
- The government frames the measure as supporting youth and public health and expects roughly €750 million a year from the cigar uplift from 2027 and about €4.4 billion across tobacco taxes by 2030.
- The cigar industry and trade groups warn that manufacturers must prefinance tax liabilities before sale, which will strain cash flow, threaten 22 medium‑sized firms with seven production sites and put about 1,600 direct jobs at risk.
- Analysts and regional reporting say the very large rise would sharply raise retail prices, likely cut legal demand and could expand illicit sales, making the government’s revenue estimates uncertain.
- The draft is not final law and will face parliamentary debate; it follows an earlier July cabinet decision for a much smaller increase and prompts questions over whether any extra revenue will be spent on health programs or general budget needs.