Surprise as ‘old reliables’ escape hikes

IN a surprise move, Finance Minister Brian Lenihan decided not to increase excise duties on cigarettes or alcohol.

Traditionally, the “old reliables” were an easy target for former finance ministers.

However, in the last budget, Mr Lenihan bucked the trend, not touching the excise duty on cigarettes and actually cutting excise duty on alcohol. This year, his position remains unchanged.

He has, however, decided to review the excise payable for bar and off licence sales next year.

According to Mr Lenihan, this “will ensure that the system is both transparent and fair”.

Chairman of the Drinks Industry of Ireland (DIGI) Kieran Tobin welcomed the decision not to increase excise duties “in the context of the difficult decisions that the Government has had to take at this time”.

However, the national charity for alcohol-related issues, Alcohol Action Ireland has described the move as “incomprehensible” — especially seeing as excise duties were slashed in 2009.

“Last year, the Government cut excise duty on alcohol and that resulted in the loss of millions in badly-needed tax revenue for the exchequer. We are now facing savage cuts to essential services and tax and levy hikes but the price of alcohol — a luxury good — will remain the same,” said Fiona Ryan.

DIGI insisted the current excise taxes on alcohol are among the highest in the European Union.

“This builds on last December’s excise reduction which was passed on in full by the industry, and had the effect of stemming cross-border sales and repatriating much of the revenue lost to Northern Ireland — as well as boosting consumer spending, the retail trade, the local drinks market, and the economy in general,” said Mr Tobin.

“Today’s decision will also assist the pub bar, restaurant, nightclub and hotel trade that has continued to suffer serious declines throughout 2010, being down approximately 14% so far this year,” he said.

According to DIGI, the sector provides approximately 78,000 jobs and €2 billion in tax revenue. But Alcohol Action Ireland argued alcohol-related harm could cost the health service an estimated €1.2bn a year in treating alcohol-related illnesses and accidents.

A spokeswoman for PJ Carroll cigarette company welcomed the retention of the existing excise rate.

“The previous ‘tax and over-regulate’ approach to cigarettes has proved dysfunctional, resulting in Ireland becoming a paradise for criminals smuggling in contraband and counterfeit cigarettes,” she said.

Picture: Sean Mullins and Mike Hurley with Donal McGrath watching the budget on TV at McCarthy’s Bar, Midleton, Co Cork. Picture: Dan Linehan

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