Sterling’s 31-year low a major challenge
Reducing excise on alcohol should be a component of the government’s Brexit economic strategy, it states, adding that the Hospitality Sector in Ireland is a vital employer in every town and county employing over 204,000 people with a combined wage bill of €4.3 billion, it points out.
“The uncertainty around Brexit and the devaluation of sterling is a real challenge for the industry,” says LVA Chief Executive Donall O’Keeffe, “We’re calling on Minister Noonan to cut excise in the Budget next week as it’s a major tax on jobs, tourism and consumers in a time of increasing economic uncertainty.”
He continued, “Recent tax increases have been difficult for our sector – indeed the average Irish drinker is now paying more than twice the alcohol-related tax of the average drinker in Europe. The combination of sterling devaluation, Brexit uncertainty and higher excise could cripple our industry. Now is the time for the government to give our home-grown sector a real shot in the arm so that we can work together to deliver further jobs and growth for our industry. Ireland should not have to suffer the self-inflicted penalty of having some of the highest alcohol taxes in the EU”.
VFI Chief Executive Padraig Cribben agrees, stating, “We need to take this heavy burden from consumers, tourists and local businesses. We don’t need higher excise, instead we need to boost businesses that employ people in every town and village in Ireland. Our high excise rates negatively affect the tourism potential of our industry. Business owners and employers in the hospitality sector are trying to maintain and grow employment in our area. We need a reduction in excise of 15% to secure the future of our more than 200,000 employees.”
RAI Chief Executive Adrian Cummins also points out that, “Ireland was 19% more expensive between January and October of 2016 due to sterling’s devaluation. The combination of high excise and the uncertainty over Brexit has caused the ‘Perfect Storm’ for the hospitality industry. Our high prices are driven primarily by our high excise levels and an excise reduction of 15% would stimulate employment, help to prevent cross-border shopping and maintain some degree of attractiveness for UK tourists. In a recent poll our members reported an average of 12% downturn for British tourists spend for July & August compared to the same time in 2015”.
Director of the Alcohol Beverages Federation of Ireland Ross MacMathuna adds, “Excise is a regressive form of taxation that hits those on less income the hardest according to the Nevin Economic Research Institute. We already have, on average, the highest excise rate and the most expensive alcohol in the EU according to Eurostat, but we still have an issue with misuse. The idea that raising the price of alcohol is a panacea for alcohol misuse is a false one. The reality is that pricing policies in other countries have been shown to be ineffective in targeting harmful and hazardous alcohol consumption as the minority who drink inappropriately tend to be the least price-sensitive”.
