Rethinking alcohol taxation in the Czech Republic

The Czech Republic could raise alcohol tax revenues, whilst reducing disparities in how different alcohol beverages are taxed, our new report reveals.

Our analysis brings together an assessment of the alcoholic beverages sector’s economic footprint and contribution with modelling of alternative, more balanced approaches to excise taxation across spirits, beer, still wine and sparkling wine – examining what these could mean for tax revenues and the wider Czech economy.

The analysis first establishes the sector’s economic contribution. In 2023, alcoholic beverages generated around CZK 92.3bn in GVA and supported just under 95,000 FTE jobs across the Czech economy, considering both upstream manufacturing and related downstream activities.

Additionally, our report finds substantial differences in tax treatment across alcoholic beverage segments. In 2023, excise duty rates varied considerably on an ethanol-equivalent basis, while still wine remained exempt. Spirits generated 64% of alcohol excise revenues despite accounting for only 28% of total ethanol consumption. With subsequent spirits excise tax increases in 2024-25 failing to deliver the expected revenues, the report analyses how alternative, more balanced tax structures could affect government revenues and domestic economic activity.

Key findings include:

• a limited reform (modest, ca. 13%, increase in beer duty and introduction of still wine duty) could increase total tax receipts by around CZK 1.9bn;

• an intermediate reform (beer and still wine duty alignment with sparkling wine) could increase receipts by around CZK 11.6bn; and

• a more extensive reform (full harmonisation of alcohol segments with spirits) could increase receipts by around CZK 21.8bn.

• estimated upper-bound reductions in upstream GVA of CZK 0.3bn - 3.6bn, with employment reductions of around 200–2,700 FTE jobs across scenarios.

The report considers potential effects on production, employment and trade, providing policymakers with a broader view of the potential impacts of reform.

Click here to read our full report, 'The Alcoholic Beverages Sector in the Czech Republic'

A Czech-language version of the report is also available here.