Below-cost alcohol ‘budgetary issue’

The Department of Finance has said it is up to its minister in the budget to decide whether or not to address concerns over millions of euro being returned to supermarkets for selling below-cost alcohol.

The remarks come after a TD and groups urged the Government to close off a legal loophole which allows retailers to reclaim a Vat refund on the difference between the cost price and the actual below-cost sale price.

Fine Gael TD Michael Creed reiterated comments yesterday that the exchequer was “raped on an annual basis to the tune of €21m” refunding supermarkets.

The taxpayer was effectively paying a subsidy to large supermarkets to promote cheap alcohol, he claimed.

“It’s simple: At a stroke of a pen by reintroducing the Groceries Order specifically for the purpose of banning the sales of below-cost alcohol, we could address this issue in another way and in a fully legal way,” said Mr Creed.

The Cork North West TD said that, under the current system, a retailer may buy a beer for €1 and sell it for 50 cent but only end up paying Vat on the 50 cent sell-on.

The Groceries Order was dropped in 2006, a move which allowed shops to sell alcohol at low prices in order to increase the footfall in their premises.

The National Office Licence Association says it has calculated that the actual amount refunded for below-cost alcohol sales has now risen to €24m per year.

Association chairwoman Evelyn Jones said the sale of cheap alcohol was not in anyone’s interest.

“Why not reintroduce the ban [on below cost sales]? What have they to lose by introducing it, there is no downside to this?” she said.

The Department of Jobs, Enterprise and Innovation yesterday said there were no plans to reintroduce the ban which would have the effect of increasing prices for consumers.

The Department of Finance said: “Any changes are for the minister to decide when doing a budget.”