Drinks’ industry pleads for stay on tax hike
In a plea for a repeat of last year’s decision by the Department of Finance to leave prices untouched, the Drinks Industry Group of Ireland (DIGI) said its members were paying the highest taxes in the EU.
They said tax on beer here was 10 times the rate in Germany and seven times that paid in France, while wine was taxed at six times the rate in Belgium and tax on spirits was five times greater than in Italy.
“No other country in Europe imposes such penal levels of taxation on their drinks industry,” said DIGI chairman Richard Dunne.
“We’ve now reached breaking point in terms of the ability of the industry to bear any further increase in this tax burden,” he said.
DIGI, which represents manufacturers, distributors, wholesalers, pubs and hotels, yesterday published its first major statistical analysis in five years to argue the industry’s importance to the Irish economy, to which it contributes €2 billion annually in excise, VAT and other taxes.
Anthony Foley, of Dublin City University’s Business School, who carried out the analysis, questioned the desirability of taxation as a way of dealing with the social and health issues around alcohol, as he said high taxes hit moderate drinkers, who were in the majority, as well as the small proportion of problem drinkers.
“It’s like collective punishment,” he said. “You do not drop a rock from a height and hope you hit the target,” he said.
He added there was a “lot of nonsense” talked about high prices of alcohol when the prices were heavily driven by taxes imposed by a Government that made a virtue of running a low-tax economy. Mr Foley said another misconception about alcohol was that consumption was rising when in fact it had peaked in 2000 and fallen since then, dropping 5.5% last year back to its 1999 level. There was a small increase this year but he believed the downward trend would continue.
Richard Dunne said the declining consumption, rising staff and property costs, increased regulation and the smoking ban resulted in big challenges for the industry.
He said there was a strong case for the Government not only to avoid tax increases in next week’s Budget, but to reduce tax rates and, in the long-term, to aim for equality with other European countries. He said he looked forward to a more reasonable debate on the drinks industry.
Consumption statistics quoted by DIGI did not include wine brought in bulk from so-called booze cruise trips to France or cross-Border purchases consumed here, which could alter the official figure.
Neither did DIGI’s report take into account the cost to the economy of alcohol-related healthcare, accidents, absenteeism, law and order, and social problems. The Department of Health’s Strategic Task Force on Alcohol last September calculated such costs at €2.65 billion per year.
There are 80,000 full-time job equivalents in the drinks industry, primarily in pubs.
Irish adults spend €1 of every €10 on alcohol.
Official consumption records show a decline of 5.5% per capita in 2003.
Pub trade fell 3% each year since 2000 but 9% since the smoking ban came into effect.
Off-licence trade in money terms rose dramatically, from 19% in 1999 to 29% last year.
In volume terms, off-licence trade is now thought to be 45-50% of the overall drinks business.
Drink exports are valued at €1 billion per year, exceeding dairy exports.
84% of beer and 91% of cider drunk here is produced here.
Exports exceed imports by €428 million.
The industry spends €1.5 billion here per year, including €66 million on advertising.
The industry contributes €2 billion per year to the country’s coffers in excise, VAT and other taxes.
Alcohol-related health, social and other problems cost the country €2.65 billion per year.
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