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SEO cost a major factor in 130 closed nightclubs

Ireland has lost 130 nightclubs in the last three years and a major factor has been the €410 fee charged to nightclub operators every time they open their doors for business.

The Chief Executive of the Irish Nightclub Industry Association (INIA) Barry O’Sullivan has said that the current hiked-up €410 fee charged to nightclubs to operate every night is killing jobs, damaging Ireland’s night-time economy and hurting its tourist offering as hundreds of individual nightclubs struggle to survive in the current economic environment.
 
He was speaking on publication of a new INIA report Licence Fees & Commercial Viability in the Nightclub Industry by DCU economist Anthony Foley which shows that 130 nightclubs – or one in four of the overall total – has gone out of business in the last three years.

Without a reduction in the fees charged for Special Exemption Orders  (SEOs) which nightclubs are required to obtain to operate every evening, dozens more nightclubs will have to close, he added.
 
A reduction in the fee for SEOs to €200 per order would be Exchequer-neutral and a ‘win-win’ by boosting the hospitality industry, saving jobs and generating further excise and VAT income for the State, he claimed.

“This new report assesses the potential stimulatory effect of a reduction in the cost of SEOs will have,” he stated, “At present, a large nightclub operating 300 nights every year and trading 18 hours every week pays €148,000 annually for SEOs. This contrasts with the €3,805 annual fee charged to publicans for trading the maximum 90 hours a week or the €1,500 annual fee for off-licences trading up to 78.5 hours per week.
 
“At a time of economic downturn, deep recession and low consumer confidence this disproportionate cost is having a major detrimental impact on nightclubs’ ability to trade.  
 
“The decline since 2007 of 27,000 nightclub operating nights is associated with the loss of approximately 600 jobs. On this basis it is clear that the SEO fee must be reduced. A €200 fee would just about allow nightclubs to break even on a €2,000 turnover. However, the reduced fee would also allow nightclubs to operate additional nights, generating further income and tax flow to the exchequer. This would neutralise any loss to the State from the reduced fee.

Such a reduced fee would permit nightclubs to operate additional nights with favourable implications for taxflow and employment which would neutralise any Exchequer losses from the reduced fee, he claimed.
Between 2007 and 2010 the number of nightclubs dropped from 430 to 300 and a lot of clubs have cut back on their hours.
“An immediate reduction in the fee would cost the government approximately €12.2 million, it would also generate over 14,000 additional nights of operation and €10 million in additional fees. On top of this, there would be additional demands for SEOs from pubs, bars and hotels, which would generate an additional €2.2 million for the Exchequer. This measure is quite simply about protecting the remaining 2,400 full-time equivalent jobs and generating an additional 330 jobs in the nightclub industry.”

He called on the new government to introduce this measure “as an important first-step in boosting the wider hospitality industry – that remains a key sector of the national economy”.

The present SEO fee of €410 – comprising a €300 court fee plus €110 in excise – is effectively for just two hour’s trading beyond the normal publican’s licence to 12.30am.

Barry O’Sullivan’s suggestion effectively cuts into the fee charged by the Courts Services.

“That’s the bit that has to be reduced,” he agreed, “It’s completely unsustainable. The SEO figures have dropped down form a high of 93,000 in 2005 to 64,000 last year.

“Since 2008 the Courts Services has increased its fee by 200 per cent.

“Despite the fact that the Courts Services generated €92 million in SEO fees for 2009, the applicants never got so much as a slip of paper to indicate that the SEO had been granted,” he told

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