The German government on Wednesday cleared the compromise on the sugar tax. The proposal for the Bundestag parliamentary groups of the Union and SPD provides for two tax tiers: 26 cents per litre for drinks with at least five grams of sugar per 100 millilitres and 32 cents from eight grams, according to the draft law available to WELT. The originally planned third tier of 38 cents from ten grams has been scrapped. The tax is to take effect on 1 July 2027. The Bundestag still has to approve it.
After days of wrangling, the coalition settled its dispute on Tuesday, as the Tagesspiegel reports. The Federal Ministry of Finance confirmed the cabinet’s adoption on Wednesday evening. With the agreement, the government is responding to resistance from the Union and from the Chancellery, which had stopped the first draft at the beginning of October.
What the tax is expected to raise
The expected revenue is lower than initially planned. For 2027, the Finance Ministry expects 690 million euros, and for 2028, 925 million euros. The first draft had still provided for 795 million euros for 2027 and 1.215 billion euros for 2028. For subsequent years, 875 to 890 million euros annually are expected, as the WirtschaftsWoche reports. The revenue is to serve to keep contributions to statutory health insurance stable.
Taxed are sweetened drinks with a total sugar content of at least five grams per 100 millilitres. According to the Finance Ministry, these are lemonades, iced teas, energy drinks and fruit juice drinks with added sugar. Exempt remain drinks containing alcohol, non-alcoholic beers, wines and cocktails, pure fruit and vegetable juices, unsweetened spritzers as well as drinks with sweeteners. Milk mixed drinks and soy, oat and rice drinks are also exempt, according to WELT.
Small and independent producers with an annual production of up to 70,000 litres are to be fully exempted. New is a second exemption for businesses with an annual production of up to one million litres. This rule is classified as state aid and will only take effect once the EU Commission has approved it.
Criticism from CDU state premiers
The Minister-President of Hesse, Boris Rhein (CDU), called the tax a “tax on expensive living”. Rising living costs were one of the biggest problems in Germany, he told the “Kölner Stadt-Anzeiger”. “I therefore consider a sugar tax to be the wrong signal, especially since it is not about promoting health but about asking citizens to pay again for the federal government’s budget holes,” Rhein is quoted as saying. Moreover, the tax endangers jobs in the beverage industry, which is dominated by small and medium-sized businesses.
The CSU fundamentally supports the tax but would like a later start. “Our preferred date is 1 January 2028. Then companies would have time to change their recipes,” said the head of the CSU Bundestag MPs, Alexander Hoffmann, on Frühstart on RTL and ntv. The CSU continues to view the start on 1 July 2027 as “very, very critical”.
The tax is intended to create incentives for manufacturers to reduce sugar content. According to estimates, excessive sugar consumption causes annual costs of around 2.1 billion euros in the healthcare system. The World Health Organization recommends consuming less than 50 grams of free sugar per day, ideally under 25 grams. In Germany, according to the Max Rubner Institute, women are at 61 grams and men at 78 grams per day.
The draft law is a formulation aid for the parliamentary groups of CDU/CSU and SPD. Since it is a pure federal tax, approval by the Bundesrat is not necessary. However, the chamber of the states can delay the process. Several CDU Minister-Presidents had recently spoken out against new or higher taxes.
Earlier coverage: Germany’s sugar tax: what fizzy drinks could cost from July 2027
