No change in excise duty after Level 3 announcement would be ‘indefensible’ say drinks group

DIGI are urging the government to reduce excise tax on drinks products by 15% minimum in Budget 2021. Photo: Michael Walter.

It would be “indefensible” to expect the drinks and hospitality industry to continue to pay “exorbitantly high” excise taxes in light of the ongoing restrictions, the Drinks Industry Group of Ireland (DIGI) said.

A new report from the group shows Ireland has the highest excise tax on wine in the EU, the second-highest on beer and the third highest on spirits.

In Ireland, 80 cents of excise tax is paid on every glass of wine served, 60 cents of excise on each glass of whiskey and 54 cents of excise on every pint of stout.

In comparison, in Germany just five cents is levied on a pint of lager, while one cent of excise is levied on a glass of wine in France.

The research, which was undertaken by economist Anthony Foley found that Ireland’s overall composite alcohol excise level is 130.8% higher than the fifth-ranked country of Estonia and is substantially higher than all other EU economies which have lower excise levels than Estonia.

Liam Reid, Chair of Drinks Industry Group of Ireland.

Liam Reid, Chair of DIGI said it would be “indefensible” to continue to expect pubs, bars restaurants and hotels, many of which have had to close or partially close under new Level restrictions, to continue to pay “exorbitantly high rates of tax” when they are allowed re-open.

‘We’re in a situation where the hospitality industry is unfairly and disproportionately impacted as a result of Covid-19. Wet pubs in Dublin have yet to reopen – seven months later – and the Level 3 ban on indoor seating for every other licensed premises mean many will shut their doors.” 

Mr Reid said the combination of the current restrictions on the hospitality in place and this level of taxation “immediately pushes most hard-pressed businesses into a loss-making situation.” 

“The Minister for Finance himself last week recognised the emergence of a “dual economy” in Ireland, whereby multinational companies continue to perform well despite the pandemic and lockdown, but domestic industries, like drinks and hospitality, face a far more uncertain future.” 

“In the interest of a fair and rapid economic recovery that will benefit thousands of businesses, rural Ireland, and young people, we strongly urge the government to reduce excise tax on drinks products by 15% minimum in Budget 2021. This can be done overnight, requiring no new legislation.

“This is a highly targeted measure that would have an immediate effect on the drinks and hospitality industry, putting more money back in the pockets of hoteliers, publicans, restauranteurs, brewers, and distillers, allowing them to quickly re-hire staff, service debt, offset reduced capacity penalties, and prepare for a challenging economic period.”