More than two-fifths of breweries are worried about the outflow of guests from restaurants and pubs due to the VAT increase, according to a survey by the Czech Brewers and Maltsters Association. At the same time, 73% of breweries expect a negative impact on employment in the brewing industry. In its consolidation package, the government wants to move all beverages, including draught beer, to the basic VAT rate of 21 percent. Until now, the rate was 10 percent for draught beer and 15 percent for non-alcoholic beer.
The union, which brings together 23 breweries among others, pointed out that the exodus of diners from businesses had already begun with the coronavirus pandemic and increasing VAT on beer and soft drinks would be another hit to the entire catering industry. “Fifty per cent of pubs that don’t sell hot food depend on their sales,” said Roman Havlik, chairman of the union.
The union said 31 per cent of beer brewed in the Czech Republic last year was consumed in restaurants. In 2009, however, it was almost half. The union said the decline is due to a trend where people prefer to drink beer at home.
Plzeňský Prazdroj, the biggest Czech brewer, said that its survey showed that up to a tenth of pubs were considering whether to continue in business because of the VAT changes. Five per cent have already decided to quit after the tax increase, according to the brewer. The brewer conducted the survey among 1,044 restaurants and pubs across the country and 87 per cent of pub-goers said they would have to make beer substantially more expensive because of the tax increase.
Prazdroj has also previously warned that pubs in smaller towns of up to 5,000 inhabitants are most at risk. According to the brewer’s data, 15 percent of them have closed in the last four years, which is over 1,300 businesses.
The changes in rates have been criticised by restaurant associations. The APRON association pointed out that in most EU countries the catering industry is generally charged a 10 per cent rate. Luboš Kastner, representing the catering industry in the Association of Small and Medium-sized Enterprises, made a similar comment. The latter suggested that the VAT changes concerning catering should be subject to a transition period of at least two years to give businesses a chance to prepare for them. She also rejects the idea that the VAT increase will lead to higher tax collections precisely because of the downturn in the entire hospitality sector. Kastner also criticised the retention of zero excise duty on so-called still wines.
For example, the majority owner of the Coloseum Holding group, Jan Mužátko, estimated that prices for soft drinks and beer will rise by more than ten percent due to the tax changes. For example, beer in the group’s companies will rise in price from CZK 69 to CZK 75, he said.
Source: CTK
