The drinks industry is calling on the Government to reduce the excise tax on alcohol by 15% over the next two years in a bid to prevent the closure of pubs and off-licences.
The Drinks Industry Group of Ireland (DIGI) - an umbrella organisation representing the Irish Hotels Federation, Licensed Vintners Association, National Off-Licence Association, Restaurants Association of Ireland, and the Vintners Federation of Ireland - wants a 7.5% reduction in excise tax Budget 2020 and a further 7.5% reduction in Budget 2021.
“Not only will this free up resources for essential business growth and job creation, particularly in rural Ireland, a reduction in alcohol excise tax will also end an unfair austerity-era tax on consumers and entrepreneurs that is long overdue a reversal,” said Rosemary Garth, chairwoman of DIGI and director of communications & corporate affairs at Irish Distillers.
The call comes in a report ‘Building a Sustainable Drinks and Hospitality Sector: The Role of Government Policy’, by DCU economist, Anthony Foley.
The report highlights the difference between the excise tax on alcohol in Ireland compared to other EU countries.
In France one cent of excise tax is levied on a 187ml glass of wine compared to 80cent in Ireland, while there is 5cent on a pint of lager in Germany, but 55cent on a pint here. Excise tax on a 70cl bottle of whiskey purchased in an Irish off-licence is almost €12, compared to €2.90 in Italy.
A survey of DIGI members found that 71% of publicans say that Ireland’s excise rate has “negatively impacted their business in the last 12 months”.
More than a third (37%) of off-licences told surveyors that they will close in the next 10 years, and 10% of rural publicans said they will let staff go in 2019 due to “rising business costs”.
According to a survey of 1,000 Irish consumers, conducted by Amárach Research on behalf of DIGI, 43% of consumers who have noticed an increase in prices as a result of the 2018 VAT hike say they have reduced their spending at restaurants, hotels and cafés. A quarter say they no longer purchase alcohol with their meals.
51% said they bring international visitors to their local pub and 64% bring guests to their local restaurant.
Ms Garth said the drinks and hospitality industry “is one of Ireland’s most important sectors in terms of tourism”.
“This industry delivers over €6 billion in tourism spend, but with Brexit uncertainty, and our lack of competitiveness in Europe, this industry is facing into some very challenging times.
“Economically, socially and culturally, Ireland is undoubtedly a changed country but some things will remain permanent, important fixtures of Irishness, and that includes enjoying a pint at a pub, a glass of wine at a restaurant, or a cocktail in a hotel bar, with friends, family and colleagues. Our research demonstrates this. However, the Government is publicly indifferent to the success of Ireland’s drinks and hospitality sector, and is more than happy to burden it with a punishing excise tax rate and high VAT,” she said.