Irish Government levy second highest excise tax on drinks and hospitality industry – report
1. Over half of Irish people (58%) celebrate family occasions in an Irish pub or restaurant
2. On a bottle of Irish produced whiskey, excise tax is over four times higher in Ireland than in Spain
3. Despite the role of pub in Irish life, Government levy excise tax on a pint of Irish beer 11 times higher in Ireland than Germany
4. 15 EU countries pay zero excise tax on wine while Ireland pays 80c per glass
5. DIGI calls for 15% cut in excise tax over two years to support industry by reducing their cost base and start to bring Irish level in line with the EU and UK, ensuring our competitiveness
While we love the pub, the Irish Government levy some of the highest taxes in the EU and UK on Ireland’s drinks and hospitality businesses.
According to a survey conducted last week among 1,000 Irish consumers by Core Research, on behalf of the Drinks Industry Group of Ireland (DIGI), 70% of people enjoy going to the pub to socialise, with 82% citing the restaurant as an enjoyable way to get out and meet people.
Almost 70% of Irish people visit our traditional pubs and restaurants to catch up with family and friends, over half (58%) to celebrate family occasions and one in four (27%) go to the pub to watch sport.
Ireland’s drinks and hospitality industry is one of our greatest success stories both here and abroad, it is engrained in the economic, social and cultural fabric of Ireland.
Excise tax rates compared
Despite this, the industry and Irish consumers are levied with the second highest excise tax rate in all of Europe and the UK, behind only Finland, according to a new report published today on comparative excise tax rates in Ireland, the EU and UK commissioned by DIGI and authored by Economist and Associate Professor Emeritus at DCU, Anthony Foley.
The report shows that Ireland currently has the second highest excise tax on wine, the third highest on beer and the third highest on spirits. For example, a glass of wine in Ireland currently incurs an excise tax of 80 cent compared to 1 cent in France, while 15 EU countries pay no excise on wine whatsoever.
On a bottle of Irish produced whiskey, excise tax is over four times higher in Ireland than in Spain, with Irish consumers paying almost €12 compared to their Spanish counterparts who pay only €2.69 in tax.
On top of this, consumers also pay an additional 23% VAT on alcohol purchases, meaning the Government is getting a total of 30-35% of the retail price of every drink sold.
Following a challenging number of years, with a pandemic, a cost of living and energy crisis, and considering the high costs of trade currently, the industry needs support to sustain and grow.
In light of this, Ireland’s drinks and hospitality sector is urging the Government to use the upcoming budget to begin the process of reducing excise tax in Ireland and bring it in line with other EU countries.
Consumer support for Irish drinks and hospitality sector
Irish consumers are also keen to see this much-loved hospitality industry supported. According to the Core research, 53% of people agree the Government should offer support to pubs and restaurants to sustain business and enable growth, while 51% agree excise tax on drinks should be reduced.
The industry says a reduction in excise duty of 15% over two years will go a long way to assist in ensuring the sustainability and future of these much used and much-loved hospitality venues. An excise cut will reduce businesses cost base overnight.
Commenting, Associate Professor Emeritus, DCU Anthony Foley said: “The data once again clearly demonstrates the very high levels of alcohol excise in Ireland compared to our EU neighbours which, of course, places a relatively large tax on the Irish drinks industry and consumers compared to other EU members. On the composite rate we remain the second highest in the EU+UK behind Finland. The top four are Finland, Ireland, UK and Sweden and the gap between these four and the other 24 countries remains large.”
Chair of DIGI and Communications and Corporate Affairs Director at Irish Distillers, Kathryn D’Arcy said: “The continued high cost of doing business in Ireland has profoundly impacted Irish businesses in recent years. The drinks and hospitality sector has been particularly affected by the lingering effects of the pandemic, coupled with inflation, an energy and cost-of-living crisis, and a cripplingly high-cost base.
“The Irish Pub is a unique cultural asset which attracts thousands of tourists to the country every year. Their value as a community hub and tourist attraction, coupled with Ireland’s world-renowned hospitality, should not be understated, as the economic contribution they bring to Ireland’s economy in this sense is significant.
“However, the value that this industry brings to Ireland is not reflected in policy or the level of recognition and support it receives from the government. It is time for the government to reset their approach to taxation and engage in long-term policy planning in order to revitalise the sector. A 15% cut in Ireland’s significantly high excise tax rate would deliver an immediate reduction in the costs for thousands of urban and rural drinks and hospitality businesses.”
