Last year, the Czech Republic recorded lower-than-expected revenues from the excise duty on alcohol, despite a 10 percent increase in the tax rate at the start of the year. This year, the state plans to raise revenues to an estimated 10 billion CZK, a figure which, however, is being questioned by the opposition, particularly the MPs from ANO and SPD.
The Czech state earned lower excise duty revenues from alcohol sales than anticipated last year, despite the 10 percent tax hike at the beginning of the year. The tax revenues remained at the same level as the previous year, when a lower tax rate applied, reports the news broadcaster ČT24. However, in the consolidation package, the government had foreseen an increase in revenues by half a billion crowns. The opposition is now calling for an analysis, as the continuous rise in the excise duty on alcohol has not achieved the desired effect.
Finance Minister Zbyněk Stanjura (ODS) believes the lower revenues may be linked to a decline in alcohol consumption. “We need to analyse whether it has actually decreased. And if so, by what percentage, and we must account for some of the cross-border tourism,” said the finance minister in an interview with the news broadcaster, adding that the effectiveness of the excise duty in border regions could be weakened because some consumers buy alcohol in neighbouring countries.
Producers of Czech spirits say that the higher tax rate and the resulting higher price put domestic products at a competitive disadvantage compared to products from Germany and Austria.
The government plans to further gradually increase the excise tax rate as part of its three-year plan (10% in 2025 and 5% in 2026). This year, according to government estimates, revenues should exceed 10 billion CZK. The opposition, particularly the MPs from ANO and SPD, have reservations about the government’s approach and are demanding an analysis from the Ministry of Finance, questioning the estimated tax revenues.
The Budget Committee of the Chamber of Deputies already discussed the issue in November, and the opposition intends to revisit it. The committee is scheduled to meet again next week to plan when the topic of the excise duty on alcohol will be addressed again. However, the government of Petr Fiala currently has no plans to alter its strategy.
