Despite running on pledges not to raise taxes in 2017, Czech officials from the ANO party are planning a hike in taxes on vices including alcohol and tobacco from 2020.
According to Czech Finance Minister Alena Schiller (ANO), the justification for the increased tax on vices is due to the salary growth and increase in purchasing power among the average Czech citizen over the past decade.
“The average wage growth [in the Czech Republic] between 2009 and 2018 was 45%, while consumer tax on alcohol was last increased in 2010 and we will not raise it again until 2020,” Schiller announced at a press conference.
The proposed tax increases relate to hard liquor (approximately 13% higher), cigarettes (a 10% increase), sports betting (2%) and lotteries and similar games (7%). Beer and wine would be unaffected by the tax increases.
With the increased tax rates, the government estimates an additional 10 billion crowns in revenue from 2020.
Currently, costs related to the treatment of vice addictions in the Czech Republic are estimated to be in the range of hundreds of billions of crowns: 100 billion for tobacco addiction, 60 for alcohol addiction, and 15 for gambling.
Czech Health Minister Adam Vojtech (ANO) voiced support for the proposed tax increases.
“Both the World Health Organization and the OECD recommend that we do something about alcohol and tobacco consumption, and one of the most effective recommendations is a higher tax burden,” he told members of the press.
The Finance Ministry pointed out that even after the increases, Czech tax rates on alcohol and tobacco would remain lower than neighboring Germany and Poland.
According industry estimates, the proposed tax raise would mean an estimated increase of up to 13 crowns per pack of cigarettes and 9.1 crowns per half liter bottle of hard alcohol for the consumer.