Off-trade On-trade

Vintners’ ‘Lid Levy’ proposal could raise €0.25bn

The LVA and VFI have jointly proposed a 15 per cent ‘Lid Levy’ on all unopened alcohol products sold in the off-trade which could put €240 million into Government coffers immediately.

The two organisations which represent approximately 5,000 members nationwide and employ 50,000 people have developed this proposal without using the blunt instrument of raising excise, they stated.

In a media briefing today (attended by LVA Chairman David Midagan, LVA Chief Executive Donal O’Keefe, VFI President Gerry Raferty and VFI Chief Executive Padraig Cribben) the two organisations outlined the detail of their proposal which was published with the assistance of legal consultants Arthur Cox and Anthony Foley of Dublin City University Business School.
With off-licence beer sales of €574 million, spirits sales of €280 million and wine & cider sales of €775 million in the off-trade, Ireland already has one of the highest levels of excise in the EU with current Government excise and VAT on alcohol on both the on- and off-trades taking in a total of €1.8 billion.

The vintners’ proposal would also go a long way to protect the employment intensive on-trade sector and 50,000 associated jobs, they stated.

Additionally, the Lid Levy would help address the issue of the availability of cheap alcohol in supermarkets and is in line with Government thinking on the matter, stated the VFI’s Padraig Cribben reflecting the recommendations of the Steering Group Report on a National Substance Misuse Strategy.

Donall O’Keeffe explained, “Publicans fully appreciate the difficult economic position the Government finds itself in. However, an increase in excise would be disastrous and would put further pressure on already hard-pressed publicans. The employment intensive on-trade sector is already suffering major declines, pub closures and job losses on an unprecedented scale.

“What we have outlined today is a 15 per cent Lid Levy which is a simple revenue-generating proposal that complies with competition law and EU regulations on VAT and excise and will conservatively generate in excess of €240m.”
With sales down 34 per cent in five years, this is seen as an alternative way for the Government to raise revenue without having to focus on excise. Ireland is in the top three for excise payments in Europe for each of the categories spirits, beers and wine, paying “a multiple of the EU average” according to Donall O’Keefe who stated, “Excise puts jobs at risk by widening the gap between the on-trade and the off-trade”.

According to Padraig Cribben, “Consumers need incentives to go out and spend their money in the hospitality sector thereby generating tax revenue, sustaining jobs and supporting this vital part of the economy. Raising excise is a crude and easy option which will only discourage people from going out.

“We are unashamedly saying that this Lid Levy proposal will help protect the labour-intensive on-trade. 90 per cent of pubs are family-owned and employ 50,000 people. These jobs are at risk and over 5,000 were lost in the last three years alone. We know the Government needs to generate income so we are giving them a solution that raises the necessary revenue but protects jobs and businesses at the same time.”

The vintners’ proposal has already been with the Government for some time now, it was pointed out.

In the five or six years since the abolition of the Groceries Order that removed the ban on below-cost selling, there has been very significant deflation in the drinks trade.

“If a higher excise is introduced, the off-trade has the capacity to absorb that by putting up the prices on any of the 3,500 to 4,000 other products,” stated Padraig Cribben, pointing out that, “Over 70 per cent of all alcohol sold in the off-trade is sold on promotion. While this is unlikely to change, an excise increase would drive a further wedge between on-trade and off-trade prices”.

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