Between 2005 and 2008 the number of untaxed cigarettes smoked in Germany grew from 16 to 20 percent, according to Hamburg Institute of International Economics (HWWI) Director Thomas Straubhaar at a conference in Berlin.
Instead of reducing the number of cigarettes smoked, the tax has only increased the number of illegal cigarettes consumed – some 23 billion, according to Straubhaar.
The tax increase has also created an overall reduction in tax revenue earned on tobacco, HWWI expert Michael Bräuninger said, adding that he expected a continued increase in contraband cigarettes.
According to a study by the DZV German cigarette association presented at the event, the increase means a yearly loss of some €4 billion.
The highest number of banned smokes – most of which come from Poland – are consumed by eastern Germans, where every second cigarette is reportedly untaxed. Meanwhile every fifth cigarette in the state of North-Rhine Westphalia is contraband.
At about €140 per thousand cigarettes, Germany has Europe’s fourth highest tobacco tax after Ireland, England and France.