Tax Plans for Alcohol and Sugary Drinks
The Finance Committee of the German Bundestag (federal parliament) held a public hearing on the tax provisions of the draft 2027 Budget Accompanying Act introduced by the German Federal Government. The hearing focused on the initially planned introduction of an excise duty on sugary drinks and increases of approximately 20 percent in the duties on alcohol, sparkling wine, intermediate products and alcopops.
Producers of sparkling wine and spirits strongly opposed the planned additional burdens. Representatives of the food and beverage industry and a trade union also objected to the new tax on sugary drinks. Other participants in the hearing supported the proposals on public health grounds or called for more substantial tax increases.
Criticism of the Increase in Alcohol Duties
Sparkling Wine Producer Warns of Economic Consequences
In its statement, Rotkäppchen-Mumm explained that the higher sparkling wine duty would particularly affect inexpensive products purchased for everyday consumption and thus a price-sensitive customer group. It stated that no public health benefit had been demonstrated. According to the company, the tax increase was justified solely on fiscal grounds, even though the anticipated additional revenue would not actually be generated.
The producer believed that some consumption could shift to untaxed alcoholic products such as semi-sparkling wine and Prosecco Frizzante. Since these products predominantly originated abroad, value creation could also move out of Germany. Rotkäppchen-Mumm identified potential consequences for viticulture, the glass industry, the hospitality sector and municipalities.
Distilleries Call for a Longer Transitional Period
A representative of an artisanal distillery also spoke out firmly against imposing further financial burdens on the industry. He referred to tax increases in the United Kingdom and Portugal, after which, according to his account, government revenue had declined rather than increased.
For smaller distilleries, he called for stronger protective mechanisms comparable to the graduated beer duty rates based on production volumes that apply to small breweries. He also expressed concerns about the initially planned short implementation period. Since pricing agreements with retailers regularly had longer terms, a transitional period of approximately six months was required.
Objections to the Tax on Sugary Drinks
Food Industry Highlights Administrative Burden
The Lebensmittelverband recalled that Germany’s former sugar tax had been abolished in 1993 as part of the harmonisation of the European single market. At the time, the disproportionately high administrative burden had been cited as one of the reasons. The association therefore warned against introducing another complex tax system while simultaneously seeking to reduce red tape.
The association also feared declining consumption and resulting job losses in the industry. Citing international studies, it argued that higher taxes were not an appropriate means of combating obesity and diet-related diseases. The soft drinks industry had reduced the average calorie content of the product portfolio covered by its data by 20.8 percent between 2015 and 2025.
Trade Union Sees Burdens for Households and Businesses
The Gewerkschaft Nahrung-Genuss-Gaststätten also firmly opposed the planned tax. It considered the levy socially inequitable and problematic for the economy. Like other excise duties, it would primarily burden low- and middle-income households, reduce their purchasing power and increase the overall price level.
In addition, the trade union anticipated significant burdens for businesses and risks to employment. According to its calculations, a crate containing twelve litres of beverages could cost 17 euros in future, compared with 13 euros at present.
Call for Adequate Preparation Time
The Deutsche Zoll- und Finanzgewerkschaft called for a preparation period of up to one year. The Lebensmittelverband had also requested a corresponding period. A representative of the Hochschule des Bundes acknowledged that every new tax entailed additional work but referred to the simplifications included in the draft legislation and considered the procedure reasonable overall.
Diverging Assessments of the Tax Policy Impact
Criticism of Low Revenue and High Collection Costs
One academic opposed excise duties that generated little revenue while incurring high collection costs and a substantial administrative burden. In his view, the duties on alcopops, coffee, beer, sparkling wine and intermediate products could be abolished.
Instead of additional levies, he advocated greater prioritisation of government spending by reducing financial assistance and tax concessions. He also called for defence expenditure to be allocated on the basis of capabilities and efficiency. At the same time, he supported abolishing the reduced VAT rate while providing relief to low-income households and reducing the standard rate to 18 percent.
He also anticipated a substantial burden associated with declaring, remitting and monitoring the planned tax on sugary drinks. Another academic criticised the fact that the introduction of the new excise duty and the increase in alcohol duties would subordinate principles of systematic tax policy and regulatory policy to short-term fiscal interests. In his view, the public health justifications were merely a pretext.
Supporters Expect Public Health Benefits
By contrast, one academic referred to the recommendations of the Finanzkommission Gesundheit. It had recommended both higher tobacco and spirits duties and a tiered tax on sugar-sweetened beverages. She therefore expressly welcomed the increase in tobacco duty that had already been adopted and the planned tiered taxation of sugary drinks.
In her assessment, the proposed increase in alcohol duties was also a step in the right direction. However, with regard to the duty on spirits, the proposal fell significantly short of the recommendations made by the Finanzkommission Gesundheit.
Based on numerous international studies, another academic expected a tax on sugary drinks to reduce sugar consumption in Germany and to have positive health effects, particularly for children and adolescents. One study had found that reducing the sugar content of soft drinks by 30 percent over a period of 20 years would, on average, prevent or delay approximately 244,000 cases of type 2 diabetes among Germany’s adult population and generate healthcare savings of up to 3.8 billion euros.
Alcohol consumption was one of the major preventable risk factors for disease and premature mortality in Germany. However, since the proposed tax increase was expected to reduce overall alcohol consumption by only approximately one percent, its public health steering effect would be very limited. The academic therefore supported a more substantial increase.
Finance Committee Revises the Tax Plans
As the legislative process continued, the Finance Committee adopted amendments to the original plans. The introduction of the tax on sugary drinks, initially scheduled for 1 July 2027, is to be postponed by six months until the beginning of 2028 and implemented in three stages.
Further amendments concern the taxation of alcohol:
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In view of the economic situation of winegrowers, sparkling wine is to be exempted from the proposed tax increase.
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In future, the alcopop tax is also to cover mixed drinks with an alcohol content of up to 15 percent by volume.
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At the same time, the alcopop tax rate is to be reduced by 45 percent.
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No additional positions are to be created within the customs administration for the introduction of the tax on sugary drinks.
The 20 percent increase in alcohol duty planned for January 2027 would be the first increase in almost 44 years. The deliberations demonstrate that the proposed excise duties are assessed differently both in terms of their economic and administrative consequences and their public health steering effect.
Tax Law Advice from MTR Legal
New excise duties and changes to existing levies can have significant implications for manufacturers, retailers and other businesses in relation to pricing calculations, contract drafting and operational processes. MTR Legal advises companies, investors and high-net-worth individuals on the relevant issues; further information is available under tax law advice.
