Abstrakt
This paper describes a general equilibrium theoretical model of alcohol taxation suitable for the empirical analysis of optimal alcohol taxation in the Czech Republic. 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.
Theoretical framework described in this paper presents improvement over the models which focus solely on Pigouvian taxation reflecting the externality effect of alcohol consumption. The model provides decomposition of optimal alcohol tax into the taxation of major alcohol beverages-beer, wine, spirits.