The coalition government has announced that the exemption from excise duty on still wine will not be abolished, contrary to speculation for more than a year. This decision has been the subject of public debate, with different opinions regarding its sustainability and consistency with the promised tax policies.
The abolition of the excise tax exemption on still wine was proposed last spring by the government’s National Economic Council as part of a package to improve public finances. The council calculated that the introduction of an excise tax on still wine, at the level of that on sparkling wine, could generate up to CZK 5 billion per year. However, Petro Fiala’s government decided to maintain the exemption, thus informing taxpayers that it did not need these funds in the state budget.
This decision was further complicated by this spring’s frost, which damaged the crops of fruit growers, nurserymen and wine growers. Initially, the government discussed European aid for these sectors and promised support from the state budget. However, the winegrowers proposed a deal: to give up funds to cope with the damage in exchange for maintaining the exemption from excise duty on still wine. The government accepted this controversial exchange, excluding the growers from the aid recipients and postponing the resolution of the problem. This situation led to criticism of the coalition parties, particularly by politicians from South Moravia.
According to Jakub Komárek, an economist at PAQ Research, there are not enough good arguments for maintaining the exemption from excise duty on still wine. Komárek pointed out that alcohol costs society more than 80 billion crowns a year, and about a quarter of this consumption is in the form of wine. However, this is not to support small wine growers, as two-thirds of the grapes used to produce still wine are imported into the Czech Republic. The state budget and taxpayers, thanks to the exemption from excise duty, do not support small wine growers, but the business of companies that import grapes cheaply from abroad and sell the wine on the Czech market at an advantage. Even Petr Fiala, a politician from South Moravia, admitted that they are aware that this is an advantage especially for imported wines.
Prime Minister Petr Fiala and other defenders of the exemption argue that the Czech Republic cannot disadvantage domestic wine growers, since the tax does not exist in neighbouring countries or in most EU countries. However, PAQ Research pointed out that among the EU countries that import most of the wine, only Germany and Luxembourg do not apply an excise tax, suggesting that the argument in defence of the exemption is only partial.
After the removal of still wine from the consolidation package, the government set up a working group to examine the issue. Agriculture Minister Marek Výborný tried to promote the idea of introducing a single European excise tax on still wine in Brussels, but the proposal was not accepted. Meanwhile, the consolidation package has come into force and everyone is already contributing to the consolidation of public finances, but not the wine producers. According to estimates, the government gave up a potential gain of CZK 5 billion per year by maintaining the exemption from excise duty on still wine. However, it saved a few hundred million in the short term by not providing direct aid to winegrowers for frost damage. This sum, which could have gone to citizens and taxpayers, was instead influenced by the political decision to maintain the exemption.
This approach has led some observers to question the fairness and professionalism of governance, pointing to a possible preference for special interests over a more balanced distribution of resources and fiscal responsibilities.
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