Moravian winemakers up in arms over proposal to tax still wines
In Czechia, as well as in most Central and Southern European EU states, still wines are not subject to consumption tax. However, with the ongoing need to balance the budget, government experts have suggested introducing precisely such a tax, arguing that it could bring CZK 2 to 5 billion crowns into state coffers. This has angered the country’s winemakers who say that it would not just hit them hard in times of crisis, but also place a long tradition under threat.
Along with sparkling wine, still wine is currently the only alcoholic beverage in Czechia that is not subject to the so-called consumption or excise tax. In practice, this means that winemakers are not charged by the state if they produce fewer than 2,000 litres of wine per calendar year.
Beer and hard liquor producers do not have such privileges and experts from the National Economic Council (NERV), which advises the government, argue that scrapping this exemption would be beneficial to both the state’s finances and to public health in a country that in 2021 ranked as the second largest per-capita alcohol consumer in the EU after Latvia. Well-known sociologist Daniel Prokop is a member of NERV.
“The current situation is bad for the budget, it’s bad for combating alcoholism and it doesn’t help Czech winemakers to compete on the international market.
“Due to the tax being levied on the number of hectoliters that winemakers produce, it would mainly impact the cheapest, so-called boxed wine variants, which experts say is one of the main products sought out by alcoholics in this country. It would have a minimal impact on the prices of wine in restaurants for example.”
However, this argumentation has run into strong opposition from Czech winemakers. On Wednesday, the Czech Winemakers Association and the Winemakers Union held a press conference in Prague’s Café Louvre where they voiced arguments against the move. I asked Martin Fousek, the spokesman of the country’s largest wine producer Bohemia Sekt, what their main issue is.
“In the Czech Republic there is a real risk of the introduction of a tax of CZK 23.4 per litre on still wine. And this extra money is not the only issue. Winemakers would be obliged to set up tax warehouses, calibrate their wine production tanks and storage facilities as well as set up security for the wine tax. All of these things represent additional expenditures and administration costs.
“Therefore if the government proposal were adopted, consumers in Czechia would end up having to pay CZK 40 more for a bottle of Moravian wine. This would be disadvantageous to the country’s winemakers because Czech consumers would behave economically and buy imported wines rather than Moravian ones.”
It isn’t just the winemakers lobby that has criticised the proposal. Agriculture Minister Zdeněk Nekula has been a strong opponent of the idea from the start, highlighting that around a fifth of the Czech agriculture sector is made up of people working in the wine industry.
“It would be highly counterproductive and I think that it could also push many winemakers into the so-called informal, grey economy. Winemaking is not just about wine and drinking alcohol. It is also about wine culture and wine tourism, so I think this move could be counterproductive and throw us back by several years.”
According to Martin Fousek, the wine industry directly employs around 30,000 workers in South Moravia and parts of Bohemia. With related businesses in the gastronomy and tourism sectors also likely to be indirectly affected were such legislation to be passed, he says that hundreds of villages and cities in Czechia’s winemaking heartland of South Moravia could suffer economic as well as ultimately cultural damage.
