Business

Hospitality group calls for 15% cut in excise on alcoholic drinks

Drinks Industry Group of Ireland says almost a quarter of pubs and restaurants have seen business costs rise by between 20 and 30%

The Vintners Federation of Ireland has a reduction of 7.5 per cent in excise tax would mean a 4 cent reduction of the price of a pint. Photograph: iStock
Fiona Keeley
Wed Sept 25 2024 - 19:03

Ireland’s drinks industry has called on the Government to reduce excise tax on alcoholic beverages by 15 per cent in the forthcoming budget.

A recent survey conducted by the Drinks Industry Group of Ireland (Digi) found almost one in four pubs and restaurants have seen their business costs increase by between 20 and 30 per cent.

Of almost 600 businesses surveyed, 15 per cent said their costs had increased by 40 per cent over the past two years.

Digi chairwoman Kathryn D’Arcy said its recent analysis “underscores the urgent need for meaningful and strategic policy measures to safeguard the future sustainability and growth of the sector”.

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Digi represents several bodies including the Irish Hotels Federation; the Licensed Vintners Association; the Vintners Federation of Ireland (VFI); and the Restaurants Association of Ireland.

In its pre-budget submission, the umbrella body has called on Government to reduce the excise rate on drinks by 7.5 per cent in 2025, and by another 7.5 per cent the following year.

Pat Crotty, chief executive of the VFI said a reduction of 7.5 per cent would mean a 4 cent reduction of the price of a pint, as well as the additional VAT. “The gross figure would be a 5 cent reduction of what is going to the Government on the price of a pint,” he said.

The group believes the high amount of tax reduces competitiveness of the sector, while lowering it would improve investment and sustainability.

A report it published in August found an average of 114 pubs have closed annually since 2005. Between 2019 and 2023, that average rose to 144.

Further findings from the report showed pub closures have had a disproportionate impact on rural communities with 25.9 per cent of hospitality businesses closing, compared to a decline of just 2.8 per cent in Dublin.

The industry group said it wants excise duty brought in line with other European countries. An international comparison study it released in July found consumers pay 55 cents in excise tax on a pint of beer in Ireland compared to 5 cent in Germany.

According to the study, Ireland charges the second highest overall rate in Europe – €3,458 of excise tax per 100 litres of alcohol. Spain charges €380 on the equivalent volume.

A reduction in “Ireland’s excessively high excise tax rate [is] a crucial step towards aligning with UK and EU average rates”, Ms D’Arcy said.

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