Not my call: Tánaiste says alcohol excise rebate scheme prohibited by EU directive

Call for scheme was made in wake of price increases announced by Diageo

A parliamentary call for an excise rebate scheme for licensed premises has been rejected by Tánaiste and finance minister Simon Harris. Picture: Carl Court/PA Wire

A parliamentary call for an excise rebate scheme for licensed premises has been rejected by Tánaiste and finance minister Simon Harris. 

Mr Harris said an excise rebate for alcohol sold or consumed in pubs would not be compatible with the EU's Alcohol Structures Directive. Mr Harris was responding to a parliamentary question from Independent TD Carol Nolan, in the wake of a decision by Diageo to increase the price of its products to publicans.

Ms Nolan asked if the Dept of Finance would examine a potential excise rebate scheme for licensed premises, "modelled on excise relief schemes operating in other sectors". 

Mr Harris said excise duty on alcohol is governed by EU law, "with which Irish excise law is obliged to conform. The Alcohol Structures Directive (Council Directive 92/83/EEC) lays down a harmonised approach to excise duties on alcohol in the EU ... The Directive does not allow scope for the taxation of alcohol to be based on packaging format (such as different rates for kegs versus bottles or cans) nor on the point of consumption (such as different rates depending on whether the alcohol product is consumed in licensed premises or elsewhere).

"Therefore, an excise rebate in respect of alcohol sold or consumed in licensed premised, as the deputy is suggesting, would not be compatible with the Alcohol Structures Directive. 

"In addition, it is also probable that any arrangement to provide a payment or credit to certain businesses (such as licensed premises generally, or those of particular sizes or in particular types of location) would constitute a State aid and, therefore, would be restricted by the rules relevant to State aid."

Mr Harris added that EU member states are obliged to apply their standard VAt rate to the sale of alcohol products, and therefore, Ireland applies its standard rate of 23% to all alcohol products. "There is no scope under the Directive for Ireland to introduce a lower rate or rebate in respect of Vat on alcohol."

The Tánaiste noted there has been no general increase in excise duty rates for alcohol since in 2014. "The total tax as a percentage of the retail price of each pint is now lower than it was more than a decade ago."

On Tuesday, Guinness owner Diageo announced plans to increase prices of draught products to publicans by 7c - with punters set to face a 20c price increase. Diageo said higher costs were behind the price increase, with the company facing increases include wage inflation, rising energy costs in Ireland, and increased logistical and regulatory requirements. The price increases are effective from February 2.

Diageo's other products include Rockshore, Smithwicks, Carlsberg, and Hop House 13. The price of Guinness 0.0 to pubs is going up by 10c per pint, Diageo said.