A recent analysis conducted by the PAQ Research agency has shed light on a concerning trend – the Czech Republic holds the unenviable title of having the highest alcohol consumption rates among all European Union countries. The ramifications of this excessive drinking extend beyond individual health concerns, posing significant challenges to the country’s social system and economic productivity, amounting to tens of billions. Surprisingly, despite these alarming statistics, alcohol taxation in the country remains below the European Union (EU) and OECD averages.

In response to this critical issue, experts have put forward a proposal to increase alcohol excise taxes, with the tax rate determined by the alcohol content of beverages, such as beer and wine. This move is anticipated to enable the government to collect an additional 12 to 17 billion Czech korunas annually. The generated revenue could be utilized in various ways, including the reduction of taxation on low-income workers.

Currently, hard liquor is taxed at levels comparable to other EU countries. However, the taxation on beer is approximately four times lower, and wine, excluding sparkling wine, is entirely exempt from taxation. Experts argue that these disparities need to be addressed by abolishing the wine tax exemption and raising taxes on beer, which have remained stagnant for the past twelve years.

The proposed adjustment to beer taxation would be based on the alcohol content per volume. For example, a ten-degree beer with four percent alcohol would be subject to an excise tax of 11.20 Czech korunas per liter, compared to the current rate of 3.20 Czech korunas per liter. Additionally, the excise tax on a half-liter of beer would increase by four korunas. The proposal also takes into account the interests of smaller breweries by suggesting a lower excise tax rate for them.

Regarding wine and other fermented beverages, the experts recommend setting the excise tax at 26.60 Czech korunas per liter for drinks with alcohol content up to 8.5 percent and 35.50 Czech korunas per liter for beverages with higher alcohol content. The proposal also includes a lower excise tax rate for smaller winemakers and cider producers.

These proposed changes are intended to address the societal costs associated with excessive alcohol consumption. PAQ Research experts argue that alcohol taxation, combined with the introduction of a minimum unit price, can serve as effective measures to combat harmful drinking habits. The broader discussion surrounding these proposals encompasses advertising regulation, stringent age verification processes, limitations on alcohol sales hours, and the provision of psychological support for those in need.

The potential benefits of implementing these measures are substantial. They not only have the potential to improve public health but also contribute to the overall well-being of society. The government’s forthcoming adjustment to alcohol taxes, as part of its consolidation package, presents an opportune moment to address these critical issues and work towards a healthier and more prosperous future for the Czech Republic.

Article by Prague Forum