Ireland: Government urged to cut crippling excise rates to save more pubs and restaurants

Irish drinkers have to swallow some of the highest taxes in the world – and now the hospitality industry is urging the Government to cut crippling excise rates to save more pubs and restaurants from going bust, Extra.ie reported on August 28.

Latest figures from the Tax Strategy Group (TSG), which advises the Government on taxation, confirm that Ireland pays the highest rate of excise on still and sparkling wines, followed by Finland.

The Irish are second only to the Finns when it comes to taxes on beer and the third-highest in excise duty on spirits.

And as pubs and restaurants struggle to cope with soaring fuel prices and fewer customers due to the cost-of-living crisis, industry leaders have urged the Coalition to cut alcohol duties by 15%.

The Vintners’ Federation of Ireland (VFI), which represents over 4,000 pubs across the country, has called for two successive cuts of 7.5% to help pubs keep customers.

VFI chief executive Paul Clancy accepted the sector was ‘well-supported’ during the pandemic and that ‘we appreciate it’.

However, he warned many pubs across the country will not survive the winter with some more supportive measures.

Mr Clancy told the Irish Mail on August 28: ‘After having had to deal with coronavirus, pubs are now being seriously affected by the cost-of-living crisis. Every input from food to wages to energy costs is rising.’

Mr Clancy expressed particular concern over soaring electricity and gas prices, noting: ‘Energy used to be 15 cents per kilowatt. Now it has tripled to 45 cents. We need a break to keep staff and keep the doors open in winter.’

He added: ‘It is about surviving through these challenging times. We want to keep jobs and to keep pubs open. Publicans are facing an energy and a costs crisis just as they recover from coronavirus.’

Mr Clancy said that, unlike excise on petrol or diesel, excise rates on alcohol are not controlled by the EU, saying: ‘This is something we can do.’

A report by DCU economist Arthur Foley published earlier this month by the Drinks Industry Group of Ireland (DIGI) revealed that 1,829 pubs – a fifth of the total – closed their doors between 2005 and the end of last year.

The highest number of pub closures (30.2%) was in County Laois. This was followed by Offaly (29.9%), Limerick (29.1%), Cork (28.5%), Roscommon (28.3%), Tipperary (26.3%), Donegal (26.3%), Longford (25.7%), Mayo (25.1%), Clare (24.7%), Westmeath (24.4%), Sligo (24%), Waterford (23.5%), Galway (20.6%) and Louth (20.3%).

DIGI and the National Off-Licence Association have also called for two 7.5% cuts in excise duties in next month’s Budget and in Budget 2024.

Restaurants Association of Ireland chief executive Adrian Cummins said the organisation also supports the excise cut as part of its submission to the drinks industry group.

However, the Government may be unwilling to relax duties on one of the exchequer’s more sustainable cash cows.

The overall take in excise for 2021 totalled €1.176bn, with wine bringing in €385m, beer €351m, spirits €389m and cider €51m.

Figures from the recent TSG study reveal that a modest reduction of 20 cent on beer, spirits and cider would result in revenue reductions of €122.4m, €86.3m and €16.5m respectively.

On wine, taking €1 off a bottle would cost €55.5m.

One senior Government source told the MoS: ‘The Budget used to be all about how much would they put on the pint. Hopefully, this one will be about how much they take off.’

However, the TSG appears to take a less sympathetic view, saying the high tax regime on alcohol ‘reflects a long-standing policy to support public health objectives’.

The TSG report also found that alcohol consumption here is falling dramatically falling, declining from 11.01 litres per capita in 2018 to 10.78 in 2019 and 10.1 in 2020.

One Government TD said: ‘The politicians will be too terrified to do anything. They fear the wrath of the HSE and Department of Health teetotaller Taliban. Expensive alcohol is going to be a feature of Irish consumer life for some time to come.’

28 August, 2022