Germany sugar tax on soft drinks: lemonade to get pricier

Germany is introducing a tax on sweetened drinks, with the rate depending on the amount of sugar per 100 millilitres. The law is due to take effect from next summer: according to the German government, a litre of lemonade will cost about 7.80 crowns more in converted terms, and less sugary drinks about 6.33 crowns more.

The aim is twofold: to raise revenue for the healthcare system and to help fight obesity. Berlin points to the experience of other European countries, where such a tax has proved its worth. The government estimates that problems linked to excessive sugar consumption cost the health service more than 50 billion crowns a year. The new tax will also bring the budget over 20 billion crowns annually in converted terms, which matters for a country that needs to cut its deficit while spending remains high.

Who the tax will affect

The measure targets mainly cola and other lemonades, energy drinks and fruit nectars. It will not apply to 100% juices, sweetened dairy drinks or non-alcoholic beer. An exemption will also be made for small producers, for whom additional taxation could threaten their survival. Alcoholic drinks are not covered by the tax either. The government explains the decision as a wish to protect children and teenagers from developing a taste for sweets.

A sugar tax on soft drinks already exists in many EU countries, including Poland, France, Belgium, the Netherlands, Portugal, Slovakia and Spain’s Catalonia. The main example is the United Kingdom, where the tax has been in place since 2018: manufacturers quickly cut the sugar content, and the amount of sugar sold in soft drinks fell by about a third. According to the World Health Organization, sugar consumption has dropped noticeably among both adults and children. In Poland the tax has applied since 2021; producers quickly widened their range of reduced-sugar or sweetener-based drinks, while energy drinks with caffeine and taurine are taxed there regardless of the sweetener.

Producers oppose the tax

The bill must still pass through parliament and then be approved by representatives of the regions, which may have objections. The tax has already been the subject of heated debate for months: food producers, unsurprisingly, are defending their interests. The German Brewers Association says the measure will increase the bureaucratic burden, at a time when beer consumption is falling and breweries are looking for sales in new segments. “Soft drinks have become a second pillar of business for many of our companies,” association director Holger Eichele told a trade publication. He hopes more exemptions will be added to the draft, since the tax will hit breweries trying to diversify their business hard as well.

The Finance Ministry initially wanted to go even further: early versions proposed taxing drinks with alternative sweeteners and possibly oat milk too. Officials relied on doubts about the harmlessness of “zero” drinks: getting used to an overly sweet taste can affect lifestyle. These plans leaked to the press in the summer and drew sharp criticism. Finance Minister Lars Klingbeil assured critics that this was only a working version and that such drinks would be removed from the final one: “There is no point in introducing a sugar tax for drinks without sugar,” he said at the end of August. About 300 producers warned in an open letter that the tax could ruin some small and medium-sized companies.

Influential members of the ruling CDU also sided with business. Its leader, Chancellor Friedrich Merz, listened to the criticism and blocked Klingbeil’s proposals until the ministry substantially reworks them. Merz has recently faced criticism within his party for being too accommodating towards Klingbeil’s Social Democrats, and conservatives are urging him to act more firmly.

Hundreds of officials to collect the tax

Many questions remain about the implementation itself. No one disputes the benefit to public health, but the impact on business and on the state apparatus is contested. From next summer the state will start collecting not only the sugary drinks tax but also a tax on plastic packaging, and it needs additional staff. According to German press reports, the Finance Ministry needs more than a thousand employees for this; the ministry has not said whether it will hire from outside or transfer people from other departments. The Taxpayers’ Association has already condemned these plans. Most of the vacancies are needed because of the plastic packaging tax, around which a consensus has formed. By the ministry’s estimate, about 220 people will be in charge of collecting the sugar tax.

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Around Prague, based on reporting by seznamzpravy.cz