The Drinks Industry Group of Ireland (DIGI) this week called for a reversal in the tax increases on alcohol that were introduced in last year’s budget, as almost a pub a day closes and sales continue to decline. The organisation points out atht rate of pub closures had almost doubled since the excise increase in last year’s budget. Previously three pubs were closing a week, but since the excise increase in last year’s budget almost a pub a day has closed, according to Revenue Commissioner data. In a pre-budget submission to Minister for Finance Michael Noonan, DIGI has warned that last year’s tax increases are threatening jobs and tourism and damaging the Government’s tax take.
Peter O’Brien, Chair of the Drinks Industry Group of Ireland and Diageo’s European Corporate Relations Director said: “The reality is that taxes kill jobs, the excise increase killed jobs. The rate of pubs closing has doubled since the measure was introduced and we are now looking at the grim reality where almost a pub a day is closing. Last year’s excise increase is not meeting desired targets. Budget 2013 expected excise to increase by €180 million or 21% on the 2012 level without allowing for buoyancy effects. The Government should be setting up a task force to assist these small family-run businesses, and reverse last year’s excise increase.
Figures for the first five months of 2013 show that alcohol excise receipts are substantially below the expected increase. Anthony Foley, DCU Business School said: “The overall drinks market continued to decline in the first half of 2013 compared with 2012. Bar sales volume continued to decline with a slower decline in the second quarter than in the first quarter. Sales value dropped by less than the volume decrease due to the excise and supplier induced price increases. Off-licence sales declined in the first half of 2013. According to clearance figures, cider sales have dropped by almost 8 per cent in the period, wine by 9 per cent and spirits by 13.5 per cent, beer is up slightly. The domestic drinks market has weakened further in 2013.”
Last year’s budget saw a 10 cent increase on beer and spirits and €1 added to the price of a bottle of wine. Wine excise is now the highest in Europe, tax on cider is second highest in EU, tax on spirits is the third highest and taxes on beer are the fourth highest. According to Eurostat, the price of alcohol in Ireland is 62% higher than the EU average.