The drinks industry is again asking the Government to cut excise duty on alcohol in the upcoming budget, warning that high tax rates are putting pressure on the drinks sector here.
In its pre-budget submission, the Drinks Industry Group of Ireland (DIGI) called for a reduction of 10 per cent in excise duty applied to alcohol, saying it would even the playing field for Irish drinks companies compared to their European counterparts.
The call came as the lobby group published new research showing that Ireland has one of the highest rates of excise duty in the European Union (EU), despite rates of consumption falling to the average EU level in recent years. The study, which was carried out by Dublin City University (DCU) economist, Anthony Foley, found Ireland has the second highest excise duty on wine and the third highest on beer and spirits across the EU.
Alcohol is also liable to VAT, pushing up the tax take for the Government.
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“The figures continue to highlight that Ireland maintains very high alcohol excise rates compared to most of the EU, placing a particularly heavy tax burden on both the Irish drinks sector and consumers relative to other member states,” Prof Foley said.
“When the different drinks categories of beer, wine and spirits are measured together, Ireland ranks second highest across the EU and UK, with only Finland applying higher average rates. In terms of the top four, excise rates in Finland, Ireland, the UK and Sweden are substantially higher than the rest of Europe.”
One example given was a bottle of whiskey, with customers here paying almost four times as much excise duty compared to Spain on the same bottle, despite the drink being produced here.
DIGI also drew attention to the new tariffs that have been placed on drinks exports to the US, noting that this was placing drinks manufacturers under further pressure.
“We’ve known for some time that excise rates in Ireland are significantly higher than the rest of Europe but this has become increasingly hard to understand given that alcohol consumption in Ireland is now at average EU levels and the fact that the industry here is known to be under intense cost pressure,” said DIGI secretary Donall O’Keeffe.
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“More than 2,100 pubs – most of them small, family businesses – have closed since 2005 and it’s predicted that a further 600-1,000 could close over the next decade unless the Government takes action to reduce the excessive costs imposed on pubs.”
Mr O’Keeffe said “punishing” rates of tax were making it “nearly impossible” for pubs to survive, and a cut in excise would offer family businesses a chance. He urged the Government to look at other countries and how governments there treat the local drinks industries.
“The French government understands the importance of its wine industry which is reflected in the lower rate of excise it applies on it; it’s a similar story with Germany and its famous beer industry,” he said.
“The Irish pub and many of our drinks are also famous around the world and yet they attract punitive rates of tax. Given the changing circumstances in international trade, it’s time for the Government to reflect on this.”
