ANO chief Babiš ruffles feathers with lower beer tax pledge

A proposal made on Thursday by ANO leader Andrej Babiš has raised eyebrows and ruffled feathers across the Czech political spectrum. The finance minister says he wants to halve the VAT rate on draft beer.

Andrej Babiš, photo: ČTK

The surprise comments were made during a television appearance on Thursday evening. Mr. Babiš stated that he wanted to announce “to the entire nation” his plan to lower the VAT rate on draft beer from 21 percent to 10 percent.

On Friday morning, the finance minister again spoke to the press ahead of a parliamentary debate on his flagship scheme for mandatory electronic cash registers (or EET) for all transactions – a proposal for which the ANO leader so far lacks the necessary support. During the press event, Babiš pushed his idea to reduce the price of a half-litre of draft – though not bottled – beer by as much as CZK 3.60. He even held up placards both in support of lower beer VAT and his EET proposals.

Marian Jurečka, photo: ČT24

Fellow coalition members the Social Democrats and Christian Democrats were not informed in advance of the idea, Babiš conceded, adding that he now sought to place it high up on the agenda of the cabinet.

Reacting to the proposal, Christian Democrat agriculture minister Marian Jurečka revealed that lower taxes for beer were first suggested last year by beer producers:

“When the Beer Producers’ Association came to me with a similar idea a year ago, both Mister Babiš and the finance ministry said: ‘no way, that would represent a major loss for tax revenue.’ I’m not against lowering VAT for beer, but then why not lower it for groceries? That is a key area affecting families and those with lower incomes...”

Václav Votava, photo: Archives of the Chamber of Deputies of the Parliament of the Czech Republic

Prime Minister Bohuslav Sobotka has been sceptical about the idea, suggesting it may not fly with the European Commission.

His Social Democrat colleague Václav Votava, head of the lower house’s budget committee, expressed disappointment over the way that Andrej Babiš had chosen to make the announcement:

“I think that Minister Babiš should have discussed this idea with the coalition. Without coalition consultations, it just isn’t correct to be firing off such ideas…of course understandable arguments can now come out about why not lowering the VAT on groceries and other items? But I don’t want to say any more than this until we debate it within the coalition.”

Other politicians also gave the idea a thumbs-down, with opposition TOP 09 party leader Miroslav Kalousek among the most dismissive:

Photo: Alexis Rosenzweig

“Populists can always pull out one particular inconsequential policy, which they then populistically sell to the public. In reality it makes bookkeeping far more difficult and opens up yet more room for tax evasion.”

Officially, the government has committed to reducing Czech alcohol consumption by 5 percent by 2020. Estimates suggest the VAT cut would also cost the Czech treasury CZK 160 million per year in lost revenue.