Measured welcome for ‘neutral’ Budget

Reaction to yesterday’s Budget has been broadly welcoming from the drinks industry which notes no increase in excise tax rates, but more needs to be done, it’s felt.

“While the Minister has made no change, we continue to be considerably out of sync with European levels” noted a DIGI spokesman, “Ireland has the second-highest rates of excise tax in the EU, behind only Finland.”

Having signalled its intention to intensify its preparations for Brexit, the Government needs to have an internationally competitive excise rate as part of this preparation, added the spokesman.

“The impact of Brexit is unfolding now – currency rates are fluctuating, the numbers of UK visitors to Ireland are falling and border counties are increasingly challenged.

“The drinks and hospitality sector employs 210,000 people and for it to safely weather the Brexit storm, closer collaboration and meaningful policy reform is imperative,” concluded the spokesman.

The LVA, too, welcomed the retention of the 9% VAT rate and the Government’s not raising excise tax on alcohol in the Budget, describing this as a “reasonable outcome for the trade, in the circumstances of the available fiscal space”.

However, the LVA, which represents over 600 publicans, stresses the fact agreed that the full effects of Brexit are already having a damaging impact on the Irish drinks and tourism sectors as evidenced in the decline in UK tourists to Ireland and the increased threat of cross-border shopping.

Bearing these threats in mind, it felt that there was a strong case for a cut in excise.

“We will target an excise reduction in 2019, as part of the Support Your Local campaign,” stated LVA Chief Executive Dónall O’Keefe, adding, “While it’s modest, we welcome the increase of €200 in Earned Income Tax Credit for the self-employed and we’re calling on the Minister to continue the process of equalising this tax credit with PAYE workers in future budgets”.

VFI reactionThe VFI broadly welcomed the Budget measures too while having reservations about the continued very high levels of excise on alcohol.

“This Budget can be viewed from the licensed trade as being a neutral Budget,” commented VFI Chief Executive Padraig Cribben, “We welcome the maintenance of the 9% VAT rate which is so important to many members throughout the country.

“We would like to have seen either a reduction in the very onerous excise levels on alcohol in Ireland or an indication that same would happen in the medium term with a view to bringing those levels back towards the European average.

“We welcome the measures that will result in individuals having more disposable income whether it be from reduced taxation or increased Social Welfare payments.

“We now need to ensure that all of the challenges identified by the Minister including Brexit, American trade policy and other global political problems will not impact on the growing economy and growing employment levels.”

While welcoming the retention of the 9% VAT rate and in not raising excise duties the Restaurants Association of Ireland pointed out that the rising cost of doing business meant retention of VAT at 9% was more important than ever.

“Ireland is still operating in a three-tier economy” pointed out RAI Chief Executive Adrian Cummins, “Dublin is galloping ahead and tourism hotspots have reported a good year.”

However he added that there are still many parts of Ireland, including rural and border counties, where business is deeply challenging and retention of the 9% VAT rate was “crucial” to these parts of Ireland.

He added that this Budget will bring “a positive response from the restaurant and tourism industry”. 

As part of the Budget, the Minister for Finance is introducing a new sugar tax of 30 cent per litre for soft drinks with over eight grams of sugar per 100ml. This accompanies a reduced rate of 20 cent per litre for drinks with between five and eight grams of sugar per 100ml.

Reaction from the soft drinks industry wasn’t slow in coming.

Expressing his disappointment that soft drinks had been “arbitrarily singled out” Britvic Ireland’s Managing Director Kevin Donnelly, commented, “It’s essential that the Department of Finance and Revenue engages with the industry to ensure that Republic of Ireland manufacturers, retailers, wholesalers, publicans and foodservice operators are not disadvantaged versus imported product, especially in an environment of weakening Sterling”.

He also pointed out that, “Given the implementation timeline is less than half that afforded to the industry in the UK, early engagement on this matter is crucial”.

Three in four Britvic Ireland products are already ‘low’ or ‘no’ sugar and not therefore subject to the tax.

Sign Up for Drinks Industry Ireland

Get a free weekly update on Drinks Industry trade news, direct to your inbox. Sign up now, it's free