German Beer Drinkers Revolt Against EU Proposal for Higher Beer Taxes

November 8, 2006

You won’t find Germany on many lists of low-tax countries. Germans face a ratio of tax collections to gross domestic product (GDP) of about 36 percent—nearly 10 percentage points higher than the United States.

However, there’s one area of tax policy where German lawmakers are decidedly averse to heavy tax burdens: beer taxes.

Yesterday’s Houston Chronicle features an amusing Associated Press account of how Germany’s resistance to higher beer taxes helped derail EU talks on proposals to sharply boost alcohol excise taxes throughout the European continent. From the story:

Fearing a backlash from beer drinkers back home, Germany was one of several countries foaming over an EU plan to push up minimum tax rates on alcohol by 31 percent…

Right now, there are different rates for different countries and different drinks. The EU minimum rates only affect a small number of countries because most are above that level.

The Commission says an increase is needed to prevent smuggling and to create a fair playing field across all 25 EU nations. It claims the real impact would be minor — just 1 euro cent per half-liter of beer.

This was too much for Germany, Deputy Finance Minister Thomas Mirow told reporters. He said Berlin was not against an alcohol tax in general, but it did not want to burden German beer drinkers — who already face a hike on standard sales tax starting in January — with an additional fee.

“Germany is not against alcohol tax but Germany is against beer becoming more expensive,” Mirow said. “We have made clear that because of the sales tax raise, we have no maneuvering space.”

For more on our own research on alcohol excise taxes, their effects on smuggling and cross-border shopping, and their regressive overall impact on the tax system, see our “Excise Taxes” section here.


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