Budget 2027: Minister seeks excise duty cut on alcohol in bid to help pubs

Enterprise minister Peter Burke is backing the measure to support pubs which did not benefit from the reduced Vat rate of 9% for hospitality businesses introduced in last year's budget

Research from Dublin City University found Ireland pays the second highest rate of excise on a pint of beer in the EU.

Enterprise minister Peter Burke is pushing for a cut to excise duty on alcohol, with Budget 2027 just over a month away.

The Irish Examiner understands that the measure is being explored to help pubs, particularly those that do not serve food. A reduced 9% Vat rate for hospitality was agreed as part of Budget 2026 and introduced in July, but does not apply to alcoholic drinks.

The reduced Vat rate applies only to food and non-alcoholic beverages.

“It would be a support to rural pubs,” one source said.

It is understood that Mr Burke would back any measure to aid rural pubs.

While the measure is seen as an aim of Mr Burke as part of October's budget, it has also been acknowledged that it may be a difficult ask due to Ireland’s public health alcohol policy.

It follows research from Dublin City University that found Ireland pays the second-highest rate of excise on a pint of beer in the EU.

According to the study, excise accounts for about 55c of the cost of a pint in an Irish pub, compared with around 5c in countries such as Spain and Germany.

The last reduction in alcohol excise duty came in 2009, when then finance minister Brian Lenihan cut the rate on a pint of beer by 12c.

In his budget speech, Mr Lenihan said he was introducing the change to stem cross-border shopping for alcohol products, while also threatening to reverse the change if the reduction was not passed on to consumers.

The most recent increase in alcohol excise came in 2014, when then finance minister Michael Noonan confirmed a 10c rise per pint of beer.

Both Alcohol Action Ireland and the Irish Medical Organisation (IMO) have urged the Government to increase the rate of excise on alcohol products.

At the IMO’s annual conference in April, delegates passed a motion calling for a 15% increase in excise duty on alcohol.

Alcohol Action Ireland chief executive Sheila Gilheany also called for a 15% increase in excise duty, arguing there was a “strong public health case” for the measure.

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She said alcohol excise rates had been “eroded” by inflation, noting that there had been no increase since 2014 and that duties were now around 15% lower in real terms.

Ms Gilheany argued that raising excise duties would help reduce alcohol-related harms, including road deaths.

It comes as the Vintners’ Federation of Ireland (VFI) is pressing for the Government to introduce a system of tax credits for the sale of draught beer.

The tax credit itself would be valued at €20 per 50-litre keg of beer, with pubs eligible to claim up to €20,000 per year.

VFI president Pat Crotty said the cost base has risen substantially for hospitality businesses, but that pubs which don’t serve food have been left behind as they can’t access the 9% Vat rate.

“All those people who don’t sell food have been affected by those costs, but got nothing,” Mr Crotty said.

He said smaller pubs in rural Ireland might not reach the €20,000 threshold, but any money put back into the business would be a “huge fillip to survive”.

Asked whether he was concerned the Government could reject the proposal on public health grounds, Mr Crotty said it would apply only to draught beer and would not cover wine or spirits.

He added that the measure would be limited to beer products with an alcohol content of 5% ABV or less.