Germany's coalition is raising tobacco tax again -- to almost 12 euros a pack by 2030, up from 9.10 next year, rising roughly 40 cents annually. The stated reason is public health. The finance ministry's own paperwork gives the other reason: an estimated 756 million euros in additional revenue by 2027, rising to 3.589 billion by 2030, aimed partly at a hole in the federal budget.
Both reasons are official. Both are true. They also work against each other, and the government's own numbers say so. The whole point of a tobacco tax working as health policy is fewer smokers. The whole point of it working as revenue policy is the opposite. The 2030 figure assumes people keep buying at close to today's volume. The government's drug commissioner, Hendrik Streeck, has said a revenue shortfall from quitting would not be a loss -- it would be "a public health success." The budget line for 2030 was not built on that assumption.
Put the number next to a bigger one. Germany's total public debt reached a record 2.662 trillion euros this year, up 151.4 billion in twelve months alone -- driven, per the Federal Statistical Office, "in particular" by higher defence spending. The entire tobacco tax increase, at its full 2030 run rate, is worth about two and a half percent of one year's debt increase. It was never going to close the hole. It was going to be seen trying to.
Beer duty tells the same story from the other direction. Raised earlier this year, it pushed brewers to dilute alcohol content to dodge higher bands and left pubs closing at close to two a day in the first quarter, citing, in their own words, the sheer weight of taxes and regulatory costs. Two legal, taxed, age-verified products, squeezed from both ends, producing revenue the state now depends on and consumption the state says it wants to end.
Meanwhile, the drug actually growing fastest in Germany is taxed by nobody, age-verified by nobody, and getting cheaper.
An investigation by ZDF frontal and the Organized Crime and Corruption Reporting Project, published in November, described what investigators call Germany's cocaine paradox: demand rising, prices falling, at the same time. Wholesale cost to dealers has roughly halved in a few years, from around 30,000 euros a kilo to around 15,000. Street price has stayed close to flat, averaging 74 euros a gram according to Germany's own drug monitoring body -- and purity has gone up, because for the first time there is more than enough supply to sell it clean. Europol's Robert Fay put it plainly: Europe has become cocaine's number one market. Colombian coca acreage grew by roughly two thirds between 2018 and 2023, to an area about the size of Luxembourg; output has doubled since 2016. Newer entrants -- Albanian organised crime running the full supply chain themselves, Brazil's PCC operating as a logistics platform one expert compared to Uber -- have cut out middlemen and made the whole business more efficient.
This is, by the numbers, the best- functioning consumer market in the German economy this year. Supply rose to meet demand. Price fell. Quality improved. New entrants competed the old intermediaries out of the chain. It happened with no tax, no age verification, and no regulator setting purity standards -- and according to the EU's drug agency, cocaine use among young German men has roughly tripled in a decade, from 1.8 percent in 2015 to 5.7 percent in 2025, with treatment admissions citing it as a first drug up 39 percent since 2018.
The revenue from all of this goes to organised crime, not the health fund. Germany's own federal crime office calls the trade a central income source for it. Nobody involved in tobacco or beer duty policy has cited any of this as a model for how those markets should be run. That is presumably not the lesson intended. It is, on the numbers, the market that is working.