Drink and cigarettes escape tax hike

By Eddie Cassidy

But publicans were last night furious that high taxes on alcohol were not cut.

The Vintners’ Federation of Ireland, which represents provincial licensees, expressed disappointment at the minister’s decision “not to reduce the current exorbitant excise duties on alcohol”.

The VFI president Seamus O’Donoghue said the minister had ignored a call from the industry for a reduction in the excessive tax regime. He said excise levies were not in line with our EU neighbours.

“It appears this Government is unable to understand levels of tax imposed on drink in Ireland and, as a result, competitiveness goes out the window,” Mr O’Donoghue said.

But ASH Ireland and the Irish Medical Organisation (IMO) were critical of Mr Cowen for not increasing prices. ASH said the decision was a retrograde step “in tackling the scourge of nicotine addition”.

Cigarette sales fell by more than 1.1 billion since the smoking ban, but ASH chairman Professor Luke Clancy insisted price increases were the single most important factor in deterring young smokers.

Both ASH and the IMO had campaigned for a €2 price rise on a packet of 20 cigarettes.

Professor Clancy said a reduction in smoking levels would assist the health budget by freeing up the thousands of hospital beds occupied by smokers.

The IMO said the Government had also “missed an opportunity” to control alcohol abuse by not imposing increases. “No one is happy to see taxes raised,” said Dr Joe Barry, “but the IMO believes that increases in alcohol tax would help to reduce problems in the accident and emergency units of hospitals.”

In its pre-budget submission, the IMO had also recommended that more funding be provided for alcohol intervention plans through a 20% hike in excise duties on drink.

But the VFI’s Mr O’Donoghue claimed the excise duty imposed on beer in Ireland was 10 times that of Germany and seven times higher than Spain.

“Wine is taxed at six times the rate in Belgium and excise duty on spirits is five times more than Spain.”

He also insisted that, contrary to popular belief, most price increases were beyond the control of the publican.

“The Government must play its part to enable a significant reduction in duties to be introduced,” he said.

Cigarettes and Alcohol

The industry, which employs 80,000 people, pays €2bn in taxes.

Average adult yearly spend on drink is €1,942.

Cigarette sales fell by 17.6% in the first 10 months of 2004.

Tobacco excise will be around €1,030 million this year, €128m below forecast following the smoking ban.