Abstract
Excise duties are an important source of government revenue and their rates change relatively often in the Czech Republic. Reforms of excise duties change the prices of goods, a change to which households respond by adjusting their expenditures.
I use detailed Czech Statistical Office data and estimates of own- and cross-price and income elasticities for individual households to create a microeconomic simulation model that enables me to simulate the impact of changes in excise duties on households' demands. I show the distributional impact of current excise duties and then I simulate the impact of hypothetical increases of 10 per cent in each of them.
I further simulate impact of certain approved or proposed changes in excise duties including the unsuccessful 2012 proposal to introduce an excise duty on wine.