To Protect Hospitality Jobs, Donohoe Urged To Cut ‘Extremely High’ Excise Tax As Part Of ‘Brexit’ Bu
As part of its pre-budget submission, the Drinks Industry Group of Ireland (DIGI), the umbrella organisation for Ireland’s drinks and hospitality sector, has urged Minister for Finance Paschal Donohoe to cut Ireland’s excise tax on alcohol by 15 percent.
In the submission, DIGI calls on the Government to create a ‘Brexit Budget’ focused on safeguarding businesses and industries that are most likely to be affected by Brexit, like those in the drinks and hospitality sector; and to encourage job creation, enterprise and tourism, including through the reduction of excise tax.
Budget 2018 is the penultimate budget before Brexit occurs in March 2019.
Ireland’s overall alcohol excise tax is the second highest in the EU, behind only Finland. Ireland has the highest tax on wine, the second highest on beer and the third highest on spirits.
As a consequence of Budget 2013 and Budget 2014, and in less than 12 months between December 2012 and October 2013, excise tax on beer increased by 44%, on spirits by 37% and on wine by 62%.
In 2016, the average annual excise tax burden on alcohol-consuming adults was €403, or €7.75 a week.
At a time of increasing pressure on Ireland’s hospitality sector following Brexit, the country’s extremely high alcohol excise tax makes Ireland less attractive to and more expensive for tourists, particularly those from the UK, our biggest market.
British tourist numbers dropped by 6.2% in the first seven months of 2017 compared to the same period in 2016. Against this decline, sterling, too, has decreased in value against the euro, making Ireland less value for money compared to other European countries.
According to the recent report, The Economic Impact of Brexit on the Drinks and Hospitality Sectors, authored by DCU Economist Anthony Foley, if this decline continues, Irish businesses could lose out on as much as €70 million in revenue this year alone.
The report also found that cross-border shopping is on the rise and could cost Irish drinks businesses €60 million this year as Republic of Ireland shoppers cross the border to buy cheaper alcohol. A sustained decline in tourism numbers and an increase in cross border shopping could cost the Irish economy €130 million.
Over 210,000 jobs are supported by Ireland’s hospitality businesses, including pubs, restaurants, hotels, off-licences, distilleries, microbreweries, wholesalers and distributors. A long-term, unaddressed decline in tourism numbers will cause irreversible damage to these businesses, including closures and job losses.
Furthermore, an excise tax reduction would immediately return money to the consumer, a policy in line with the Government’s commitment to reverse austerity-era tax increases and ‘give back’ to taxpayers. In its pre-budget submission, DIGI also calls on the Government to:
Maintain the 9 percent hospitality VAT rate;
Collaborate with drinks and hospitality sector businesses in formulating policies to ‘Brexit-proof’ the sector;
Increase support for Ireland’s start-up microbreweries and distilleries, making it easier for them to sell their product on-premises.
Commenting, Donall O’Keeffe, Secretary at DIGI and CEO of the Licensed Vintners Association, said: “Brexit poses the most significant existential threat to the Irish economy since the recession and has the potential to cause long-term damage. This is particularly the case for our drinks and hospitality sector which relies on tourists, especially those from the UK. Many of these businesses are in rural Ireland where they are the primary and often only employers. Without a plan, a continued decline in British visitors will have a significant impact.
“DIGI believes that reducing excise tax by 15 percent will create immediately appreciable benefits for both consumers and businesses. The Government must Brexit-proof Budget 2018 with policies that not only protect vulnerable businesses most exposed to Brexit, but encourage national industrial growth, encourage foreign investment and fuel consumer spending.”
The Irish drinks industry supports 92,000 jobs and enables a further 210,000 in the wider hospitality sector. It exports €1.25 billion in goods annually and generates €2.3 billion of revenue for the Exchequer.