The report, authored by Dublin City University Economist Anthony Foley, compares Ireland’s excise rates against the UK and 27 of our EU counterparts.
It finds that Ireland continues to have the second-highest overall excise tax on drinks in the EU (and UK), having the highest excise tax on wine, the second-highest on beer and the third-highest on spirits.
Despite Ireland producing some of the world’s most popular drinks products, the Irish government levies a tax bill of almost €12 on a bottle of off-licence-bought Irish whiskey produced in an Irish distillery. The tax on the same bottle in Spain is €2.69.
The excise per half-glass of spirits ranges from 69 cent in Finland and Sweden to 8 cent in Bulgaria, with 15 countries imposing an excise tax of less than 20 cent. In Ireland, the level is 60 cent.
A tax of 54 cent is applied to a pint of Irish stout served in a pub, restaurant or hotel.
The Irish level of excise per pint of beer is 55 cent in comparison to 21 EU countries who’ve a beer excise per pint of less than 20 cent. In Germany, it’s just 5 cent.
In France, a country equally renowned for its drinks industries, excise tax rates on wine are far lower. The tax on a glass of wine in Ireland is 80 cent while in France, it is 1 cent.
Ireland has the highest wine excise in the EU27 and UK while 15 EU countries do not impose any excise on wine.
Ireland’s high excise rates represent another high business cost for the hospitality sector and Irish consumers at a very challenging time, according to the report and the DIGI has called on Government to reduce the excise tax rate in Budget 2023 by 7.5%. This should be the start of a programme of annual excise reductions to gradually bring Irish drinks excise tax in line with the much lower EU levels across Budget 2023 and 2024, it believes.
Ireland’s high excise tax on drinks products, combined with soaring energy costs, increasing interest rates, high commercial rents, insurance and VAT – which is 23% and payable in addition to excise tax – is putting the industry under added and severe pressure and only compounding the challenges, states the DIGI.
Similarly, as consumers increasingly find it difficult to deal with the effects of the cost-of-living crisis, our high excise rates represent yet another tax with which they’re levied.
“The high level of excise duty levied on spirits, wine and beer is a concern for consumers and hospitality businesses as they face into a deepening cost-of-living crisis,” commented DIGI Chair, Communications and Corporate Affairs Director at Irish Distillers, Kathryn D’Arcy, “As the costs of production for drinks producers are rising and consumers’ disposable income is also diminishing, we’ll see a downward shift in demand among consumers which will pose another challenge to the longer-term sustainability of the hospitality sector.
“Ireland has the second-highest overall excise tax rate in the EU27 and the UK, second only to Finland. Such high tax rates decrease the competitiveness of the Irish market when seeking to entice tourists to Ireland and inflict an undue cost on hospitality businesses and consumers.
“Irish hospitality businesses have only begun the recovery since the closures necessitated by the Covid pandemic and are now faced with a paralysing cost of living and cost of doing business crisis. There are many challenges facing the sector right now and we must seek to provide support, particularly as it applies to business costs. The Government must ensure our tax policies adequately account for this and ensure the long-term sustainability of the sector.
“We’re calling on the Government to reduce the excise rate by 15% across a two-year period – 7.5% in 2023 and 7.5% in 2024 – to help support the hospitality sector reduce its cost-burden and to ease the cost of living for consumers. As energy costs and other input costs rise, we need to offset these costs through a reduction of taxes and tariffs such as excise duty which could be implemented overnight.