Czech Republic increases tax on tobacco, alcohol and gambling

Prague, Czech Republic – On Monday, the Czech government officially approved a proposal by the Finance Ministry to raise the consumer tax on tobacco, spirits and gambling, reports Czech daily Dennik.

Czech Republic approves higher tax on tobacco and alcohol

According to the Finance Ministry’s legislative proposal, presented by Minister Alena Shillerova (ANO) during a press conference, the excise duties on tobacco and cigarettes would increase by 10% (from 27% to 30%), while the one on spirits would register a 13% hike. The bill would also implement a higher consumer tax on some forms of gambling, which might go up by more than 20%.

According to the Czech news agency ČTK and calculations from the Finance Ministry, the price increase for one cigarette pack could range from 6 to 12 Czech crowns. The new tax would apply to all kinds of tobacco-related products, including cigarettes, cigars, electronic cigarettes and smoking tobacco.

A half-liter of hard spirit could cost around 10 Kc more (roughly 40 cents), according to calculations from the government, which points out that excise duties on alcohol haven’t been raised since 2010 and that this new hike is in line with the recommendations of the World Health Organization (WHO) and the OECD to combat alcohol and tobacco-related addictions and diseases.

The tax hike on alcohol would only apply to hard spirits (not beer nor wine).

Over 10 billion Kc revenues to the state budget

According to the Finance Ministry’s calculations, the new hikes could bring in roughly 10.5 billion Czech crowns (more than 400 million euros) in 2021 and 2022 to the state budget revenue.

The government led by Czech Prime Minister Andrej Babis has been seeking various ways to increase state revenues to fund future hikes in expenditures, including in public sector wages, amid economic slowdown.

The proposal still has to be approved by Parliament and signed into law by Czech President Milos Zeman. While the Civic Democrats (ODS) said they would approve the bill, other parties, including TOP 09, announced they would vote against the measure. If approved, it would take effect as of January 2020.