Finance Minister Klingbeil Rejects Draft Proposal to Tax Sugar-Free Drinks in Germany

Rejection of the draft proposal

German Finance Minister Lars Klingbeil rejected plans on Wednesday to extend a planned national beverage levy to artificially sweetened and sugar-free drinks such as Cola Zero. Speaking after a cabinet retreat in Neuhardenberg, Brandenburg, Klingbeil distanced himself from an internal draft paper originating in his ministry that had surfaced earlier in the week. The SPD politician stated that the preliminary working paper had never reached his desk and dismissed the inclusion of sugar-free products.

I will not present a tax as Finance Minister where sugar-free drinks are taxed. I think that is nonsense, if I may say so openly.

The draft benchmark paper had proposed levies not only on high-sugar soft drinks but also on products containing non-sugar sweeteners, including fruit nectars, non-alcoholic beer mixes, oat milk, syrups, concentrates, and instant powders.

Proposed rates and fiscal projections

The leaked framework established a graduated tax structure based on sugar concentration per 100 millilitres. Drinks containing more than 10 grams of sugar per 100 millilitres faced an additional charge of 38 cents per litre, while those with 7 to 10 grams faced a 32-cent levy, and drinks with 4.5 to 7 grams were set at 26 cents per litre. The paper also assigned a flat 26-cent per litre rate to drinks containing alternative sweeteners, matching the lowest tier for added sugar.

Expanding the tax base to artificially sweetened beverages would have generated at least 2 billion euros annually for the federal budget. Under the baseline model adopted during health reform negotiations in early summer, projected annual revenues stood between 250 million and 600 million euros. The federal government intends to use the proceeds to help stabilize statutory health insurance funds starting in 2027.

Coalition dispute and ministerial reactions

The expanded proposal drew opposition from the Union within the black-red governing coalition. The Federal Ministry of Food and Agriculture, led by CSU Minister Alois Rainer, sent a formal protest letter on Tuesday arguing that taxing sugar substitutes removed the incentive for consumers and manufacturers to switch away from sugar. Rainer's ministry also argued that taxing alcohol-free beer and wine would undermine alcohol prevention initiatives.

Even with taxes, it must contain what it says on the tin. Otherwise people rightly feel deceived.

Negotiators indicated that the proposal to include artificial sweeteners originated from the SPD-led Environment Ministry, which cited chemical loads on the drinking water supply. Klingbeil later stated on Instagram that ministry technical staff must be allowed to discuss ideas internally without drafts being treated as final political policy.

Health policy and state-level debate

State ministers expressed divergent views on how the beverage tax should be structured before its planned 2027 introduction. Mecklenburg-Vorpommern Health Minister Stefanie Drese argued against using the health measure primarily for fiscal purposes.

This important topic must not be about plugging budget holes. We must instead talk about measures to reduce sugar consumption and combat nutrition-related diseases.

Hesse Minister-President Boris Rhein criticized the levy as an unnecessary burden on consumers designed to raise federal revenue. Lower Saxony Consumer Protection Minister Miriam Staudte urged the federal government to reach a unified stance quickly to prevent industry lobbying from delaying the legislation.