Ireland’s beer excise 11.4 times Germany’s

Following the recent Budget here, Irish excise on alcohol remains the second-highest in the 27 countries comprising the EU.

 

Ireland pays the highest excise tax on wine, the second-highest on beer and the third-highest on spirits in the EU28. The figures are contained in a new comparative report entitled Tax on Ireland’s drinks and hospitality sector – How Ireland’s excise tax on drinks compares with other EU countries and the UK.

It was written by Anthony Foley of Dublin City University Business School and commissioned by the Drinks Industry Group of Ireland.

The report highlights the excise situation in other high-income European countries renowned for their drinks and hospitality industries. These include Germany, France and Italy whose excise is levied at a far lower rate than is the case here in Ireland.

“Germany, famous for its lagers and wheat beers, charges five cents of excise on every pint” states the report, “in wine-producing France and Italy, a glass of red or white receives an excise levy of just one cent and zero, respectively.

“These countries recognise the value of their drinks and hospitality industries to their manufacturing exports and tourism brand. In Ireland however the government is taking back taxes of approximately a third on every drink purchased by a consumer at a pub or restaurant.”

This is a tax that detracts from maintaining the 200,000 jobs that the Irish drinks and hospitality industry supports, states the report, pointing out that the present crisis means that, “as many as 114,000 jobs in accommodation and food services, which includes jobs in pubs, hotels, and restaurants, could be lost by the end of 2020 and early 2021 without strong and immediate government action”.

Other factors, like commercial rents and insurance, make Ireland the fifth-most expensive place in the EU in which to do business.

Among the key findings of the report are that 15 EU economies do not impose any excise on wine whatsoever. Of the 13 that do levy excise on wine, France has a “very low” rate of €35 per HLPA and Malta has a rate of €186. This compares with the Irish rate of €3,862.

Ireland’s beer excise is currently 11.4 times that of Germany and its Irish spirits excise is 4.4 times that of Spain today.

 

Ireland’s comparative ranking in excise

The comparative position of Ireland relative to the 28 countries is presented in Tabular format in Tony Foley’s report. The only countries comparable to Ireland in terms of high levels of alcohol excise are the UK and the two Nordic countries Sweden and Finland.

All other 24 EU economies have low alcohol excise rates compared to Ireland.

 

EU alcohol tax rates (excise) (euro per HLPA), May 2020, three beverages and composite level and rank in country alphabetical order

Country	Spirits	Wine	Beer	Composite level	Rank of composite level
Austria	1,200	0	500	567	18
Belgium	2,993	681	501	1,392	7
Bulgaria	562	0	192	251	28
Croatia	810	0	540	450	24
Cyprus	957	0	600	519	20
Czechia	1,253	0	311	521	19
Denmark	2,009	1,371	653	1,344	8
Estonia	1,881	1,344	1,270	1,498	5
Finland	4,880	3,609	3,650	4,046	1
France	1,787	35	761	861	12
Germany	1,303	0	197	500	21
Greece	2,550	0	1,250	1,267	9
Hungary	996	0	484	493	22
Ireland	4,257	3,862	2,255	3,458	2
Italy	1,036	0	755	597	17
Latvia	1,642	964	780	1,129	10
Lithuania	2,025	1,497	711	1,411	6
Luxembourg	1,041	0	198	413	25
Malta	1,360	186	483	676	15
Netherlands	1,686	803	759	1,083	11
Poland	1,433	361	489	761	14
Portugal	1,387	0	418	602	16
Romania	718	0	179	299	27
Slovakia	1,080	0	359	480	23
Slovenia	1,320	0	1,210	843	13
Spain	959	0	199	386	26
Sweden	5,011	2,309	1,960	3,093	3
UK	3,190	3,003	2,118	2,770	4
Ireland’s rank	3	1	2	2	2

Source:  Spirits Europe, Summary of EU member states + UK, Brussels (excise rates as of May 2020). The exchange rates are those of Oct 2019 as used in the EU excise tables, except for the UK and Sweden for which we use August 2020 monthly average rates. Composite level is the unweighted average of the three rates. 

 

Cider

The report’s data, taken from the European spirits data, cover beer, wine, spirits and intermediate products but data are not available in this source for cider.

However in order to provide some degree of comparison the UK’s excise rate per hectolitre of product for still cider and perry (of alcohol content greater than 1.2% but less than 6.9%) is £40.38 or €44.83 at the August 2020 exchange rate.

The 2020 Irish rate per hectolitre of still cider and perry product is €94.46 for alcohol strengths between 2.9% and 5.9%, points out the report, stating, “Consequently for cider up to 6% alcohol by volume the Irish excise rate is 110.7% greater than the UK rate”.

 

Quantitative differences in excise

Seventeen EU economies have a composite excise rate less than one-quarter of the Irish rate. The report goes on to highlight some of the main points arising from this quantitative aspect of the comparison including that Germany’s composite alcohol excise per HLPA is €500 or 14.5% of the Irish level and that Ireland’s cider excise is more than double that of the UK.

Indeed, if German rates were applied to Ireland, Irish excise revenue would total €178.7 million instead of €1,232.6 million. Ireland therefore pays about €1,053.9 million more annually in alcohol excise tax than German rates would imply, suggests the report.

“The choice of Germany is used, although some other countries operate excise rates that are closer to Ireland, because it is the largest economy in the EU” the report explains, “and is generally acknowledged as being well-managed from the economic and public financial perspectives. It is also a very large incoming tourism market for Ireland in ‘normal’ economic times.”