Cabinet approves sugar tax – in a light version

The Federal Cabinet has launched the controversial sugar tax. According to the Federal Ministry of Finance, led by SPD politician Lars Klingbeil, it should serve both to keep contributions for statutory health insurance stable and to make an important contribution "to protecting the health of children and young people in particular."

Accordingly, the ministers decided on a formulation aid for the government factions in the Bundestag “for the introduction of a sugar drinks tax”. The government factions from the Union and SPD are now likely to introduce a corresponding bill in parliament soon. Representatives of both camps had only recently agreed on the new instrument, and CDU and CSU politicians in particular have so far rejected it.

With its proposal, the federal government is implementing "what associations in the areas of health, science, child protection and consumer protection have been calling for for a long time," the Finance Ministry continues. Excessive sugar consumption increases, among other things, the risk of chronic obesity and diabetes or cardiovascular diseases - the annual supply costs for the health system due to the increased consumption of sugary drinks are estimated at around 2.1 billion euros.

According to the ministry, the tax, which is due to take effect from July 1, 2027, is expected to generate additional revenue of 690 million euros for the federal government in the coming year; in 2028 it should be 925 million euros and from 2028 to 2031 between 875 and 890 million euros. The tax revenue should therefore be used to “keep the contributions for statutory health insurance stable.”

According to the formulation aid that has now been adopted, it is specifically planned that a tax rate of 26 cents per liter will be levied on sugar-sweetened drinks with a sugar content of five grams or more per hundred milliliters; from eight grams it should be 32 cents. The tax should cover, among other things, cola, lemonades, iced teas, energy drinks, fruit nectar or juice concentrates with added sugar.

There should be exceptions for small manufacturers, although the exact limits are still open. The federal government is aiming for an exemption for all companies that produce a maximum of one million liters per year. But this must be approved by the EU Commission.

Non-alcoholic beers or wines should also be excluded, as should milk, oat and rice drinks, pure fruit or vegetable juices or unsweetened spritzers. “Beverages that are sweetened with sweeteners should also not be subject to the sugar drinks tax,” explained the ministry. Originally, the tax was also supposed to apply to “Zero” lemonades.

Günter Tissen, general manager of the Sugar Economic Association, sharply criticized the project. The government is relying on “additional burdens and more state intervention and paternalism.” He argued: "A sugar drinks tax law doesn't make anyone slimmer, but it destroys jobs and irretrievably destroys added value in rural areas." That's why the Food, Pleasure and Restaurants union (NGG) also rejects the tax on sugary drinks.