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A General Equilibrium Model of Optimal Alcohol Taxation in the Czech Republic

Author

Listed:
  • Karel Janda
  • Zuzana Lajksnerová
  • Jakub Mikolášek

Abstract

This paper provides a general equilibrium theoretical model of alcohol taxation and empirically estimates the model. For this purpose, we use a model determined by both externality corrections and fiscal considerations as the tax increase is assumed to immediately change other governmental policies such as labour taxation or medical expenditures. The results of our analysis show that under most parametric scenarios, the current Czech tax rate on beer and wine is below its optimal level and that the fiscal component has a significant impact on the optimal level of tax.

Suggested Citation

  • Karel Janda & Zuzana Lajksnerová & Jakub Mikolášek, 2019. "A General Equilibrium Model of Optimal Alcohol Taxation in the Czech Republic," Prague Economic Papers, Prague University of Economics and Business, vol. 2019(5), pages 589-611.
    • Handle: RePEc:prg:jnlpep:v:2019:y:2019:i:5:id:706:p:589-611
    DOI: 10.18267/j.pep.706
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    More about this item

    Keywords

    alcohol; beer; wine; Czech Republic; elasticity; price; social costs; tax;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • Q02 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Commodity Market
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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