No excise increase but battle goes on
The Drinks Industry Group of Ireland has described the Government’s decision not to change excise duty on alcohol in Budget 2017 as “a reflection of the current economic reality”.
11 October 2016 | 0
However, it emphasised that given the uncertainty surrounding Brexit, the devaluation of sterling and the fact that Irish consumers and tourists in this country pay the highest rates of duty on alcohol in the EU, the case for a cut continues to gain momentum.
“The drinks industry is operating in an extremely difficult and uncertain economic climate, so the Government’s decision today not to not cut excise on alcohol is a missed opportunity for the industry as we approach the Christmas trading season and the increased threat of cross border shopping,” said DIGI Secretary Donall O’Keefe, “Irish consumers continue to pay the highest prices for alcohol in Europe. Put simply, excise is a tax on consumers, jobs and tourism.
“The drinks industry makes a huge contribution to the Irish economy, supporting over 200,000 jobs across the country and a wage bill of €4.3 billion in addition to providing an essential part of Ireland’s tourism offering. An excise reversal would help support jobs and small businesses in every town and village across the country.”
“Ireland is 20% more expensive due to sterling’s devaluation. The combination of high excise and the uncertainty over Brexit has caused the ‘Perfect Storm’ for the hospitality industry. A decrease in excise would help make Ireland a more attractive destination for tourists, especially those from our largest market-UK”.
He concluded, “The drinks industry firmly believes that there’s real merit in cutting excise duty and we’ll continue to campaign for a decrease in this punitive tax which would support economic growth and job creation in every community in Ireland”.
NOffLA has also acknowledged the Government’s decision not to increase excise duty on alcohol. It sees this as a move which will offer some relief to the difficulties currently being faced by the independent off-licence industry in Ireland.
“Even with the growth in Ireland’s economy, independent SMEs such as off-licences are still trading in a difficult economic environment and today’s announcement provides a level of stability for business owners all over the country,” commented NOffLA’s Government Affairs Director Evelyn Jones, “Since 2008 some 3,000 jobs – 34% of the sector – have been lost and 554 off-licences have closed. In April of this year seven off-licences alone closed. Business owners across Ireland still face significant difficulties and in the wake of Brexit our challenges are further exacerbated. Our members, in particular in the five border counties, have already experienced lost sales due to an increase in cross-border shopping, driven by a weak sterling and are wholly unsupported as this uncertainty looks likely to continue.”
NOffLA views the present excise rate on alcohol as a punitive regime “which deeply affects both our domestic producers and our international partners” she stated, “We believe that this is making Ireland an unattractive place in which to do business, limiting the choice available to Irish consumers and discouraging foreign investment in this country. The extreme difference between our excise and our European partners is unsustainable and needs to be addressed by the Government going forward.”
“Were excise to have been reduced, we believe the Government would have shown a commitment to creating jobs in communities all across Ireland,” she concluded.
The Restaurants Association of Ireland too expressed a cautious welcome today for the government’s retention of the 9% VAT rate for the tourism and hospitality sector and that it will not be increasing excise duty on wine for the second year in a row “however, excise duty in Ireland is still the highest in Europe with consumers paying 64% tax on a bottle of wine”.
But the Association has voiced its frustration that employers’ PRSI bands will not be widened.
RAI President Anthony Gray added, “The cost of doing businesses for restaurateurs is increasing year on year. The cost of operating a tourism business in Ireland continues to be higher than the EU average across a range of metrics, putting the sector at a disadvantage internationally”.
And the Alcohol and Beverage Federation of Ireland has stated that the Government’s decision today not to reduce excise on alcohol represents a missed opportunity for one Ireland’s largest indigenous sectors.
“The drinks industry has come under increasing pressure this year following the Brexit vote and subsequent plunge in the value of sterling,” commented ABFI Director Ross Mac Mathuna, “The industry supports the employment of over 200,000 people across the country from the grain to the glass and contributes over €2 billion in excise and VAT to the Irish economy. However, we continue to pay the highest price for alcohol in the EU – on a standard €24 bottle of whiskey we pay a staggering €16.40 in taxes, meaning it is much cheaper to buy Irish whiskey in the US than it is in Ireland. Our high excise rates are a barrier to new distillers and brewers looking to develop a strong home market as a springboard for exports. Also sterling’s devaluation means we are increasingly vulnerable to cross border trading.”
ABFI will continue to engage with policymakers to campaign for a cut in this punitive tax.
“A cut in excise would positively impact jobs and small businesses in every town and village across the country in a time of increasing economic uncertainty,” concluded Ross Mac Mathuna.
However the Irish Beverage Council has expressed itself “extremely disappointed that the Minister for Finance continues to labour under the delusion that additional taxes on soft drinks will have any positive impact on obesity.
“Internationally, this thesis has been tested and has a 100% failure rate. A sugar tax will hit consumers, industry and the economy for no public health benefit.
“It’s some comfort that the Minister has announced that the levy will not be introduced ahead of that planned in the UK. We can only hope Government will engage in meaningful dialogue to minimise the economic loss to industry and threat to Irish jobs.
“Tackling obesity requires a whole of society approach. We remain committed to playing our part in tackling obesity and will continue with initiatives like reformulation, which took 2,500 tonnes of sugar and 10 billion calories from the Irish diet in a seven year period.”