Govt 'must reduce excise on alcohol by 10%'

The Drinks Industry Group of Ireland (DIGI) has called on the Government to reduce excise duty on alcohol by 10% to offset the 2% VAT increase said to be introduced in the Budget.

The group said latest official figures revealed that the pub trade has been reduced by over a quarter in the last four years.

DIGI Secretary and CEO of the Licensed Vintners Association (representing Dublin publicans) Donall O’Keeffe, said: "Consumers need incentives to go out, spend their money, generating tax revenue, sustaining jobs and supporting this important sector of the economy. The Government’s role in boosting confidence and facilitating consumer spending is absolutely critical.

DIGI said that with a 6.7% decline in the on-trade up to the end of September this year, and likely further dramatic falls in October and November, Ireland’s pubs cannot sustain losses on this scale, with the sector approaching meltdown.

"We are therefore extremely disappointed that the Government has announced it will increase VAT by 2% in Budget 2012. This will inevitably lead to price increases and will act as a major disincentive to consumers to socialize and spend money in the hospitality sector. It will exacerbate the severe difficulties being experienced by the on-trade in particular.

"Any such price increase could also provoke a return to the cross-border purchasing of alcohol and other goods that had been addressed through the December 2009 excise reduction. This would mean further lost revenue to the State.

The group said that the latest Central Statistics Office figures show that bar sales declined 28% from mid-2007 to mid-2011 and sales from the on-trade sector has declined by 6.7% this year to the end of September.

"Given that Ireland has very high alcohol taxation by EU standards the Government should now implement a 10% reduction in excise based on the positive outcome of the last taxation cut two years ago, and to mitigate the impact of the 2% price increase."