Drinks group: €92m tax cut can save tens of thousands of jobs

Irish people pay €12 excise tax on a 70cl bottle of whiskey, versus €5 in France and €3 in Italy; 14 EU countries pay zero tax on wine

Protecting Irish drinks and hospitality jobs: Kathryn D’Arcy, newly elected chair of the Drinks Industry Group of Ireland, and director of communications and corporate affairs at Irish Distillers.

Ireland can protect tens of thousands of hospitality and drinks sector jobs with a 7.5% reduction on excise tax on alcohol products, says Kathryn D’Arcy, newly elected chair of the Drinks Industry Group of Ireland.

The director of communications and corporate affairs at Irish Distillers, Kathryn succeeds Diageo’s Liam Reid following his two-year term as DIGI chair. Kathryn's first priority is to protect jobs.

DIGI represents drinks and hospitality industries in Ireland, manufacturers, distributors and the retail sectors, including Ibec’s Drinks Ireland, Licenced Vintners Association, Vintners Federation of Ireland, Restaurants Association of Ireland, Irish Hotels Federation and the National Off-Licence Association.

Pre-pandemic, the drinks industry directly employed 92,000 people in Ireland. Hospitality supported almost 210,000 jobs, purchasing €1.1bn worth of Irish inputs annually and exporting €1.25bn worth of produce every year.

DIGI estimates that a 7.5% cut in excise across all drinks would cost the Exchequer around €92.5m. Ireland has the second-highest overall excise tax on alcohol; it has the highest tax on wine, the second highest on beer, and the third highest on spirits.

CLIMATE & SUSTAINABILITY HUB

“Our priority is to ask Government to do everything it can to protect jobs by bringing Ireland in line with the rest of Europe,” said Kathryn D’Arcy. “If you want to promote Ireland as a great place to visit, then we must ensure that we are competitive for those who visit the country.

“We are looking at ways that we can support the hospitality and drinks sectors in their post-Covid recovery. Visitors can see that they can buy Irish whiskey for less in their own countries than it costs here. That is down to the high tax rates.” 

In real terms, c.€12 on a 70cl bottle of whiskey bought in an Irish off-licence is excise tax; a French consumer pays less than €5 in tax, and an Italian consumer less than €3.

Fourteen EU countries do not levy any excise tax whatsoever on wine. In Ireland, 55c on a pint of lager goes straight to the State, versus 12c in Belgium and 5c in Germany.

“We have the second highest excise tax in Europe, only Finland is higher than us,” said Kathryn. “Our hospitality sector is heavily dependent on tourists coming here. Ireland’s hospitality sector lost €12bn over the last two years.

“Now that tourists are starting to visit Ireland again, we need to look at long-term programmes and policies to support jobs in these industries. We also need to look at ways to promote careers in the sector.

“Reducing excise tax is a policy that can be introduced overnight with an immediate impact of reducing the costs of doing business for tens of thousands of business owners in the hospitality sector in Ireland.” 

The new DIGI chair is calling on the Government to deliver policy measures that can boost the sector overnight as hospitality business owners are experiencing “a perfect storm of increased operating costs, severe recruitment challenges and their own personal costs of living soaring”.

Next week, DIGI is to launch its 2022 campaign, addressing the strain the sector is experiencing due to increased costs and seeking State policy supports.  

"In addition to protecting jobs, a reduction in excise tax would also deliver an overnight boost to help business owners with their soaring costs," said Kathryn. "The jumps in inflation and living costs are really impacting hospitality businesses. The excise tax reduction would be so easy to implement that it would give the sector an instant lift." 

The call for policies that will support jobs and protect the future of the sector is the No1 priority for Kathryn D'Arcy as she takes on the DIGI chair. 

Kathryn said: “I look forward to taking up this position at such a critical time for the industry. The drinks and hospitality sector has sustained some of the toughest years in its history, with extensive closures and limitations on our ability to trade.

“While the industry is optimistic in its outlook in a post-Covid world, it remains very cautious given the immediate and significant challenges in the period ahead.

“Inflation and the cost-of-living crisis are having a huge impact on society. Business owners are experiencing a perfect storm of increased operating costs and severe recruitment challenges while their own costs of living soar.

“We need to see tangible and actionable supports which are easily implemented. Central to this is introducing policy measures which can make both an immediate difference and a long-term impact in terms of delivering sustainable policy." 

Meanwhile, sustainability is another key priority for Ireland's drinks sector. Diageo has plans for a new purpose-built carbon-neutral brewery on a greenfield site in Littleconnell, Newbridge, Co Kildare. The state-of-the-art brewery will be powered with 100% renewable energy and will harness the latest process technology to minimise overall energy and water consumption.

Irish Distillers is investing €50m over the next four years on projects to make Midleton Distillery carbon neutral by the end of 2026. Irish Distillers is using new emissions-reducing technology to phase out the use of fossil fuels to power its operation. The new Mechanical Vapor Recompression (MVR) technology will see a closed loop system capture, compress and recycle waste heat in the distilling process. This is the first time this technology has been used across multiple batch processes in distilling.

Irish Distillers has also conducted research with MaREI, SFI Research Centre for Energy, Climate and Marine, hosted by UCC, to determine the biomethane potential of the by-products of distillation and design the required anaerobic digestion process necessary to produce biogas.