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A look at the tax statistics confirms the poor state of the shisha industry.
According to the Federal Statistical Office, tax stamps were issued for 727 tons of water pipe tobacco in 2023, significantly less than in 2022. © Bernd Weißbrod/dpa
Smoking hookahs was trendy for years, and more and more shisha bars opened in cities.
There are said to be 5,000 in Germany.
But now their economic prospects are bleak.
Berlin - According to an industry association, the shisha industry is threatened with a wave of bankruptcies this year.
“If the federal government does not change course and overturn a senseless packaging regulation, one in three or one in four shisha bars will probably be closed by the end of this year,” said the managing director of the Federal Association of Water Pipe Tobacco, Folke Rega, to the dpa in Berlin.
He was referring to conversations with bar operators and retailers who reported a sharp drop in demand for legal tobacco.
There have already been some store closures.
The economic situation among manufacturers and retailers is very tense, and there is even an “acute” threat of insolvency.
The price of shisha tobacco has doubled
The regulation introduced in mid-2022 states that shisha tobacco may only be sold in single can packaging and no longer in large containers.
According to the association's estimates, this has roughly doubled the price.
To save money, many consumers bought illegal products.
They inhaled at home and no longer in a shisha bar.
“Black market products are dangerous, they are not subject to state food controls and contain contaminated tobacco and banned substances,” warned Rega.
A look at the tax statistics confirms the poor state of the shisha industry.
According to the Federal Statistical Office, tax stamps were issued for 727 tons of water pipe tobacco in 2023, significantly less than in 2022 (893 tons).
This is the net value, after deduction of refunds.
Compared to 2021 - the year before the packaging regulations were introduced - according to the General Customs Directorate, there were 6,897 tons.
The legal market currently only accounts for around a tenth of its 2021 volume.
If you take into account the pull-forward effects that occurred in 2021 in view of an upcoming tax increase and that increased the legal quantity with a special effect at that time, it would be around a seventh of the market at that time.
Tax revenue fell sharply, but consumption remained stable
While tax revenues have fallen sharply, consumption has remained stable, according to estimates by the industry association.
Association managing director Rega concludes this from feedback from importers who sell special shisha charcoal and continue to report good business.
“Much of the shisha charcoal is used to light black market tobacco.”
He is annoyed that sellers of untaxed hookah tobacco appear aggressively on social media and sometimes even use their real names to advertise the deals in backyards.
“The police and customs remain largely inactive, even though these are systematic violations of the law that make life difficult for honest merchants.”
He appeals to the Federal Ministry of Finance to change the regulation on packaging size and allow larger containers again.
“That would stifle the black market and boost legal business,” says Rega.
“The federal government would then have significant additional tax revenue, which it could put to good use right now, in times of tight budgets.” According to the Federal Statistical Office, the value of the tax stamps that the state issued for hookah tobacco was 41.2 million euros in 2023, significantly less than 2021.
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At that time, the Federal Ministry of Finance estimated that the tobacco tax reform would generate tax revenue of 155 million euros for hookah tobacco - as additional revenue in addition to the revenue that would have existed without packaging regulations.
However, it is now clear that the actual total amount of shisha tax revenue is significantly lower.
dpa