The National Off-Licence Association has warned Government that at least 750 jobs in the independent off-licence sector alone will go in the event of an increase in excise duties.
The warning was made following the publication of NOffLA’s Pre-Budget Submission amid rising concerns within the drinks sector over the implications of a ‘No Deal’ Brexit.
According to the Summer Economic Statement the Department of Finance is preparing budgetary options for an orderly withdrawal and a ‘No Deal’ Brexit but NOffLA is warning against increases to excise duties in the ‘No Deal’ Budget option as a means of increasing Government revenues.
The results of NOffLA’s 2019 Annual Members’ Survey, which have been presented to the Minister for Finance, show that were excise to be increased in Budget 2020, 57% of members would be forced to let staff go and 63% would struggle to remain open. This equates to the loss of at least 750 well-paid jobs to the economy.
Due to the market conditions for independent off-licences, more than one in three members don’t believe they’ll be open in 10 years’ time, highlighting the need for Government support. Survey results were collected during the Conservative Party leadership contest, which drove an increase in the likelihood of a No Deal Brexit.
Approximately 92% of respondents believe that a reduction in the level of excise duty will mitigate against the likely impacts of Brexit while an overwhelming majority (81%) believe excise duty increases from the period 2012/2013 continue to negatively impact their business today.
98% of NOffLA members do not believe the Government is doing enough to support SMEs while 86% support the implementation of Minimum Unit Pricing in RoI alone with 86.67% of members believing that excise is the main driver of cross-border shopping.
However one in three NOffLA members believes that MUP will have no impact on their product prices, showing that deep discounting is predominantly practiced by the supermarkets.
Worryingly, the 2019 Survey also found that 33% of surveyed off-licences experienced a drop in turnover in 2018 while a further 44% experienced no increase in turnover at all in the calendar year. This comes in the context of a dramatically improving macroeconomic position, with Ireland the fastest-growing economy in Europe.
Since 2008 the off-licence sector has lost 3,000 jobs. As such, NOffLA is calling on Government to protect the remaining 5,900 off-licence jobs in light of the threats associated with a No Deal Brexit.
Its Pre-Budget Submission to the Department of Finance has called on the Government to:
- Reduce excise duty on alcohol by 7.5%per annum over two Budgets (10 Cent on spirits/beer/cider and 50 Cent on a bottle of wine) to support Ireland’s already struggling regional and local economies
- Apply parity to wine taxation in relation to domestic alcohol. At present, retailers and suppliers need to raise and pay an extra €17,958 per 1,000 cases of wine in excise and VAT due to increases in Budget 2013 and 2014, now totalling €47,035, up 61%.
- Immediately commence MUP and re-introduce a ban on the below-cost selling of alcoholto ensure responsible retailing of alcohol and to prevent retailers reclaiming 23% of the loss in their VAT return. This would save the State an average of €24 million each year.
- Establish tighter control on out-of-state imports in terms of VAT and excise collection thus ensuring out-of-state and online retailers cannot sell directly to Irish consumers without paying the required tax and VAT.
“Our members are growing increasingly concerned regarding the possibility of a perfect storm, with a No Deal Budget including increases to excise duties to raise Government revenues,” said NOffLA’s Government Affairs Director Evelyn Jones, “The independent off-licence sector continues to face significant challenges due to Ireland’s punitive alcohol tax regime. Our excise rates are damaging for local communities and have driven NOffLA members to the brink of commercial failure. A No Deal Brexit would likely be the final nail in the coffin for our sector.
“Excise increases also have shown to be a wholly ineffective means of reducing alcohol consumption. Government is now progressing targeted public health measures through Minimum Unit Pricing and so we’re calling on Government to reduce excise duty to support local businesses throughout the country.”
Following on from its submission NOffLA met with the Department of Finance’s Tax Strategy Group to discuss the topic of excise duties further and the cost of off-licence renewal fees.