Marketing

General industry welcome for Budget

The drinks industry has evinced a generally positive reaction to the Budget although the Government’s decision not to reduce excise tax levels has been described by the Drinks Industry Group of Ireland as a “missed opportunity” while it welcomes the upfront excise relief for microbreweries.

“An excise reduction would have supported consumers” stated DIGI Chairman Peter O’Brien, “Irish excise levels are among the highest in the world. We’ve the third-highest rate of excise tax on spirits and beer in the EU and the highest excise tax on wine in the EU. Ireland is now the most expensive country in the world to buy alcohol with beer excise up by a staggering 44% since 2012.”

He pointed out too that an excise reduction would have supported jobs in the drink and hospitality sector which supports 92,000 jobs from grain to glass.

“An excise reduction would have supported growth,” he added, “The industry purchases €1.1 billion-worth of Irish inputs, supporting jobs on farms across Ireland and makes a €2 billion wage contribution to the Irish economy. An excise cut would also support small businesses and jobs in local towns and villages. There are currently an array of drinks manufacturers and suppliers attempting to enter the Irish market, including 23 whiskey distillers and numerous craft brewers.

“An excise reduction would have supported tourism,” he continued, with, “8,298 pubs and hotels offering a unique hospitality experience for tourists and consumers alike, but we need to bring our excise levels in line with European norms.

“We hope that the government that delivers Budget 2017 will realise the full potential of the sector and reduce the extortionate excise levels that undermine the recovery of this industry.” 

While a reduction in excise rates was its preferred outcome, the LVA stated that status quo was preferable to a rise and the Budget decision would bring a degree of stability to alcohol taxation.

While the Government’s decision was not unexpected, LVA Chief Executive Dónall O’Keeffe thought that most publicans would probably respond with a mixture of realistic resignation and positive expectation.

“We made a strong case for a reduction in excise,” he pointed out, “but we also knew that securing a reduction in the current climate was challenging. However as the economy improves we look forward to seeing significant reductions in excise rates next year.

“The retention of the 9% VAT rate for the hospitality sector is a positive and we must acknowledge the positive contribution it has made to the industry. In addition the cut in the Universal Service Charge will lead to an increase in disposable income and consumer confidence which is good news for publicans.”

The LVA has also warmly welcomed tax relief measures for the self-employed.

“We’ve been calling for some time for fairer and more equitable tax treatment for self-employed people,” he concluded, “We welcome the introduction of the earned income tax credit of €550 as a very positive first step and look forward to this being brought up to the €1,650 tax credit which PAYE workers currently enjoy.”

The VFI too welcomed the decision to narrow the gap in tax credits between the self-employed and PAYE workers.

“The phasing in of the PAYE tax credit for publicans and other small businesses is clear recognition of the contribution these businesses make to the Irish economy,” stated the Federation which for years has been calling for more equality for the self-employed.

It also welcomed the measures around the reduction in Capital Gains Tax for entrepreneurs and the release for microbreweries.

However the Federation too expressed disappointment that the current level of excise duty has not been reduced, also viewing this as a missed opportunity to reduce excise levels that are a multiple of most other countries.

Retaining the current status quo on alcohol excise will offer some relief to the difficulties currently being faced by the independent off-licence industry in Ireland, stated the National Off-Licence Association.

While independent SME’s are still operating in a very challenging economic environment, today’s announcement does provide an element of reassurance to business owners all over the country, believed NOffLA’s Government Affairs Director Evelyn Jones.

While excise has not been increased in Budget 2016 it is important to note that consumers still have to pay 624% more excise on every bottle of wine purchased when compared to other EU countries,” she stated.

“We believe this extreme difference is unsustainable and needs to be addressed by the Government going forward.”

She pointed out that NOffLA members are committed to the communities they serve and believes the Government has the power to make positive changes to enhance the trading environment for businesses, save the Exchequer money and also benefit the public health.

“We would therefore, again call on the Government to introduce a Minimum Unit Price on alcohol to discourage deep discounting and promote responsible retailing.

“Furthermore, we’re calling on the Government to illustrate its commitment to the health of communities all across Ireland and ban the below invoice cost selling of alcohol. The availability of cheap alcohol as a means to drive footfall in multiples encourages irresponsible retailing and is a threat to the broader community through alcohol abuse and anti-social behaviour. Such a ban would save the exchequer €24 million per annum.”

The Restaurants Association of Ireland welcomed the retention of the 9% VAT rate which it describes as a ‘tourism tax’ and is ‘satisfied’ to see no excise increase on alcohol.

“A widening of the PRSI weekly pay band has also been established, which alleviates the unbalanced cost attributed to the employer as a result of an increase in the National Minimum Wage,” it stated.

“Today, in Budget 2016, our three key issues have been addressed,” commented RAI Chief Executive Adrian Cummins, “We stressed that Budget 2016 needed to be pro job creation and pro economy and the Government have assured us that the VAT rate at 9% would be retained and a widening of PRSI pay bands to alleviate costs on employers.

“The Retention of VAT at 9% into 2016 is crucial to not only the sustainability of restaurants and businesses in the tourism sector but also to job creation and the continued growth of our economy.”

The success of the lower rate of VAT is evident in the 32,558 new jobs that have been created since its introduction in 2011 and in the savings of €651 million to the Exchequer in the past four years, he added.

“This is the correct decision by the Government, it keeps Irish tourism competitive, attracts overseas visitors and most importantly allows for the creation of a further 50,000 jobs in the tourism and hospitality sector in the upcoming years,” he said, adding that the Budget that was delivered would bring a positive response from the industry.

Restaurateurs also welcome the reduction in costs of accepting card payments.

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