“Government not doing enough for SMEs”
If excise is increased in Budget 2019, 76% or three in four members of the National Off-Licence Association would either be forced to let staff go or struggle to remain open according to the results of NOffLA’s annual Members’ Survey released recently as part of its Pre-Budget Submission.
22 August 2018 | 0
98% of NOffLA members do not believe that the government is doing enough to protect Irish SMEs generally but most worryingly the 2018 Survey also found that 52% of the off-licences surveyed experienced no growth at all in the calendar year while 31% experienced declines in sales in 2017. This comes in the context of a dramatically improving macroeconomic position with Ireland the fastest-growing economy in Europe.
The off-licence sector has lost 3,000 jobs since 2008. As such, NOffLA is calling on the government to protect the remaining 5,900 jobs which contribute to local communities throughout the country. In its Submission to the Department of Finance, NOffLA has called on the Government to:
- Reduce excise duty on alcohol by 15%(10 cent on spirits/beer/cider and 50 cent on a bottle of wine) to support Ireland’s already struggling regional and local economies by increasing rural employment as well as securing the livelihoods of communities in border regions, particularly in the face of Brexit threats.
- Apply parity to wine taxationin relation to domestic alcohol. At present, retailers and suppliers must raise and pay an extra €17,958 per 1,000 cases of wine in excise and VAT due to increases in Budget 2013 and 2014, now totaling €47,035, up 61%.
- Reintroduce a ban on the below-cost selling of alcoholto ensure that retailers cannot reclaim 23% of the loss in their VAT return. Such a ban would also ensure that alcohol is retailed in a responsible manner through the elimination of deep discounting.
- Establish tighter control on out-of-state importsin terms of VAT and excise collection, thus ensuring out-of-state and online retailers cannot sell directly to Irish consumers without paying the required tax and VAT. Such controls will ensure online retailers are fit for purpose, tax compliant and meet the same licencing obligations as domestic retailers.
Cross-border illicit trade has also been given an added impetus due to the devaluation of Sterling and the lower rates of excise charged in the UK.
“NOffLA members are significant local employers based in communities all around the country and as such we’ve a clear view of the economic reality for Irish SMEs,” commented Evelyn Jones, NOffLA’s Government Affairs Director, “While the economy is improving generally, as with previous years, our Members’ Survey has shown that the recovery is not being felt by all.
“The independent off-licence sector continues to face significant challenges associated with a punitive alcohol tax regime that’s not in line with other European nations and is damaging not only local communities but also our national competitiveness.
“Our members are baffled by Government’s approach to supporting Irish SMEs, setting the highest excise rates on alcohol in Europe, yet allowing large multinational supermarkets sell alcohol at below-invoice-cost and therefore reclaiming €24 million per annum in VAT rebates. This imperils small or micro-SMEs such as ours, slowly but surely eroding the margins for independent specialists.
“We’re calling on the Government to take positive and decisive action that will safeguard jobs, encourage local investment and ultimately contribute to the development of local communities.”
NOffLA points out that if excise were to be reduced by 15% in Budget 2019, 37% of members would employ more staff and 39% would increase salaries.
2018 NOffLA Members Survey – Results
- 83% of respondents noted that their turnover in 2017 was either down or experienced no change when compared with 2016
- 96% of members believe that deep discounting and promotions by large supermarkets have contributed to this decline
- Approximately 81% of respondents believe that a reduction in the level of excise duty will mitigate against the likely impacts of Brexit
- 71% of members believe that a ban on below-invoice-cost selling would level the playing field between the independent off-licence sector and large supermarkets
- Since the first increase in excise duty in 2012, 39% of respondents have had to reduce staff by one or more members, 12% of off-licences have been forced to close an outlet and nearly one-in-three have struggled to remain open
- If excise were increased in Budget 2019, 43% of members would struggle to remain open, while 33% would be forced to reduce staff by one or more member
- 55% of members believe that implementing Minimum Unit Pricing alone will not ensure that alcohol is retailed at a responsible level, but must be supported by a ban on below-invoice-cost selling (63%).