Broken tax policy is fueling a black market booze boom in Czechia

While the Czech Republic battles one of the highest alcohol consumption rates in Europe, its attempts to curb the epidemic are falling short on both health and fiscal fronts.

New data reveals that alcohol addiction is costing the public health system billions of crowns annually and that government tax hikes on spirits may be doing more harm than good.

According to the General Health Insurance Company (VZP), which covers 60 percent of the Czech population, the treatment of alcohol addiction alone cost the insurer one billion crowns last year. That’s nearly double the amount spent on all other drugs combined.

At the same time, attempts to reduce consumption through higher excise taxes on spirits are faltering. The Union of Spirits Producers and Importers warned this week that the black market for alcohol is growing, depriving the state budget of an estimated CZK 1.5 billion annually and driving legitimate producers to the brink.

“The persistently high consumption of alcohol in the Czech population is alarming,” said VZP spokeswoman Viktorie Plívová speaking to the Czech News Agency (ČTK). Experts estimate that 1.5 to 1.7 million Czechs engage in long-term hazardous drinking—a population larger than the entire city of Prague.

Alcohol is linked to around 6,000 deaths per year in Czechia, over 100 times more than deaths caused by illegal drugs. The cost burden includes not only direct treatment but also social services, lost productivity, accidents, and criminal justice. Estimates peg the total societal cost of alcohol at CZK 50–75 billion per year.

But tax increases meant to reduce consumption aren’t delivering. In fact, they may be driving drinkers underground.

“The tax on spirits has gone up 44 percent in six years, but state revenue has only increased by 8.5 percent,” said Pavel Dvořáček, president of the spirits producers union and CEO of Rudolf Jelínek. “That’s clear evidence of a shift to untaxed, illegal alcohol.”

In Moravia, almost one in two households reportedly distills their own brandy. Legal spirit sales have plummeted. Meanwhile, cheaper alcohol is being purchased in neighboring Austria and Germany, especially in border regions.

The result is a paradox: even as over 27,000 people were treated for alcohol addiction last year—3.5 times more than for any illegal drug—the government’s fiscal tools appear to be pushing the problem further into the shadows. “This is not just a health issue,” said former anti-drug coordinator Jindřich Vobořil. “It’s an economic and social one.”

Producers say the tax structure itself is flawed: wine remains untaxed, beer is lightly taxed, and spirits bear the brunt, despite all delivering similar levels of ethanol. “It’s absurd,” said union executive director Vladimír Darebník. “There is no ‘good’ and ‘bad’ alcohol, only alcohol. But current policy distorts that.”

With an estimated 900,000 adults drinking daily, Czechia’s relationship with alcohol is deeply cultural, but also increasingly costly. Experts argue that prevention, education, and addiction services must be prioritized. And that taxation policy needs a rethink, one that balances public health aims with economic reality.