In contrast, France charges just one cent on a glass of wine and 14 EU member states including Italy, Germany and Portugal, charge no excise on wine whatsoever.
In Germany, a pint of lager served in a German pub comes with a small excise levy of just 5 cents and excise on a bottle of spirits bought in a French off-licence is less than €5 and less than €3 in an Italian off-licence.
Ireland’s levy on cider is double that of the UK per hectolitre of product – €94.46 vs €45.51.
These figures are revealed as part of a new report, Alcohol Excise Tax in Europe: Where Does Ireland Rank?, the latest in a series of reports examining Ireland’s drinks industry and its contribution to the economy.
In addition to excise tax, VAT is also charged on alcohol at a rate of 23% – and VAT is levied on both the original price plus the excise tax itself.
Indeed, Ireland ranks second in the EU’s ‘Big 4’ for overall alcohol excise tax, according to the new report authored by DCU economist Anthony Foley and published today by the Drinks Industry Group of Ireland.
The Big 4 – Finland, Ireland, Sweden and the UK – comprises EU member states with disproportionately high alcohol excise tax compared to other countries in the bloc.
The country with the fifth-highest alcohol excise tax, Estonia, has a rate almost 50% lower than Ireland’s and 33% lower than the last country in the Big 4, the UK.
Finland has the highest overall excise tax in Europe (€3,941 per HectoLitre of Pure Alcohol followed by Ireland (€3,458 per HLPA), Sweden (€3,094 per HLPA) and the UK (€2,782 per HLPA). Estonia, despite being the member state with the fifth-highest alcohol excise tax (€1,848 per HLPA), has a rate nearly 50% lower than Ireland’s.
An obstacle in the way of growth
The drinks industry employs 90,000 people, directly and indirectly, in businesses across the country. If tourism is included, much of which is dependent on or enabled by the drinks industry, that number grows to 254,400, or 11.5% of all Irish jobs.
Ireland has the highest wine excise in the EU, the second-highest beer excise and third-highest spirits excise, ranking alongside Finland, Sweden and UK.
DIGI, ahead of Budget 2019, is calling on the Government to reduce Ireland’s high alcohol excise tax.
While a tax cut would give more money back to consumers and small business owners, the group also describes it as a ‘defensive measure’ in the face of internal and external threats to competitiveness and revenue generation.
“The drinks and hospitality industry is one of Ireland’s most important,” said Communications and Corporate Affairs Director at Irish Distillers and DIGI Chairperson Rosemary Garth, “Together, manufacturers, distillers, brewers, pubs, off-licences, restaurants, hotels the length and breadth of the country generate €2.3 billion in revenue for the Exchequer every year.
“However, as the market becomes more competitive, and events like Brexit exert pressure and pile on risk, that income is no longer guaranteed. While Irish drinks businesses are excellent innovators, there is only so much they can achieve while shouldering the second-highest excise tax in Europe.
“A smaller tax would allow businesses to spend more money on expanding into new markets, developing new goods and services, refurbishing and expanding premises and creating new jobs. Having fewer obstacles in the way of growth and innovation is especially important if British tourism and patronage slows in the event of a ‘no deal’ Brexit.
“Ahead of the forthcoming Budget, DIGI is asking the Government to support this industry which accounts for a significant number of small businesses now and reap the rewards of increased productivity, sales and exports in the near future.”