The Czech Republic: Tax on draught beer to soar from 15% to 21%

The Czech Republic is due to see the tax on its draught beer soar from 15% to 21% as part of new plans revealed by its government, The Drinks Business reported on May 12.

The ‘austerity package’, which is named ‘Czechia in Shape’, was introduced at a press conference yesterday and is set to see the country with the biggest beer consumption per capita in the world making a raft of radical changes.

The suggestions were, according to local reports, laid out by cabinet officials in a bid to lower the state budget deficit by CZK94bn (€4bn) in 2024 and by CZK150bn in 2025 and would also coincide with VAT on food being lowered from 15% to 12%.

According to statements from the conference, the package additionally ‘includes raising the pension age and hiking corporate and real estate taxes and is a hopeful “cure” to reduce the country’s ballooning public budget deficit, which has risen due to both the pandemic and the cost of living crisis having a knock on effect on the local economy.

The moves are said to involve the Czech government’s aim to make savings by scaling down non-investment subsidies by CZK54.4bn and the cost of running the state by another CZK20bn over the next two years.

According to the Czech Minister of Finance Zbynek Stanjura, who spoke at the conference, the tax measures will raise the state’s income by CZK69.22bn over the next two years.

In his opening statements during the discussions on May 11, Czech Prime Minister Petr Fiala, chairman of the neoliberal ODS party, said that his cabinet was “the first government in 10 years which has had the courage” to address the issues and make changes.

Marketa Pekarova, chairman of the free market TOP 09 party, referred to the measures as a “cure package” while Vit Rakusan of the centre-right Mayors and Independents said that Czechia is “one of the most successful countries worldwide” it added that, to maintain this, it needs to avoid the looming “debt spiral”.

Chairman of the liberal Pirate Party Ivan Bartos insisted that the reforms were made so that the impact is justly balanced across the society, however the fear is that the moves are “radical” and could also impact individuals and businesses as each navigate the next few years of “austerity”.

Other Central European countries such as Slovakia and Estonia are also rumoured to be contemplating similar packages in the next few months.

12 May, 2023