10c hike in price of alcohol would net €110m

The Government has confirmed that a 10c hike in the price of alcohol in the next budget would net the State more than €110m if the public was to maintain current consumption levels.

Finance Minister Michael Noonan was asked by Independent Dublin TD Tommy Broughan how much additional revenue would be generated from an additional one, two, three, four, five and 10 cent increase in excise duty on tobacco and a range of alcoholic drinks.

Mr Noonan informed him that a 10c increase in the price of a pint of beer alone would generate €66m more for the State coffers, while the same increase in the price of a measure of spirits would net almost €32m.

The minister said €12.5m could result from a 10c increase in the pack of 20 cigarettes.

However, he has previously pointed out that Revenue does not believe an increase in the cost of cigarettes will result in any gain for the State due to lower consumption as a result of the price hike and greater moves by smokers to cigarettes bought legally outside the State or those purchased on the black market.

In response to Mr Broughan, the minister said as a result of an increase in the cost of alcohol, consumers “might” divert their consumption to alcohol bought legally in another EU Member State or to illicit products.

Meanwhile, Mr Noonan has also indicated that a new scrappage scheme in the car industry is unlikely to be announced in the budget.

The scheme in place from January 2010 to June 2011 saw vehicle registration tax (VRT) relief of up to €1,500 where a car of 10 years or older was scrapped and a new car in the CO2 emissions bands A or B was bought.

“Any proposals that could potentially boost economic activity will be considered in the context of Budget 2015,” Mr Noonan said.

“However, I would point out that, as the most recent car scrappage scheme ended only three years ago, I would be mindful of the potential deadweight cost associated with introducing a new scheme so soon after the previous scheme ended.”

He also pointed out that car sales figures for the first five months of this year have been more than 24.5% higher than the same period in 2013, “suggesting the motor trade is showing signs of recovery”.