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Home > Dail Eireann debate. Written answers 192, 193, 194 & 195 - Excise duties [Alcohol] [38191/14, 38192/14, 38193/14 & 38194/14].

[Oireachtas] Dail Eireann debate. Written answers 192, 193, 194 & 195 - Excise duties [Alcohol] [38191/14, 38192/14, 38193/14 & 38194/14]. (07 Oct 2014)

External website: http://oireachtasdebates.oireachtas.ie/debates%20a...


Deputy Dara Calleary asked the Minister for Finance if his attention has been drawn to the threat to 92,000 jobs being supported by the drinks industry in every county throughout Ireland following the increase in excise on alcohol in the past two budgets; and if he will make a statement on the matter. [38191/14] 

Deputy Dara Calleary asked the Minister for Finance if his attention has been drawn to the large gap that now exists between the on and offline trade caused by the increase of excise duty on alcohol in budget 2014, which is now highlighting the inability of pubs and independent off-licences to offset these excise increases by increasing margins on other products as can be done by the large multiple sector; and if he will make a statement on the matter. [38192/14] 

Deputy Dara Calleary asked the Minister for Finance his views that excise increases in successive budgets have cost jobs, have made the tourist offering less competitive here and have increased costs for struggling consumers here; and if he will make a statement on the matter. [38193/14] 

Deputy Dara Calleary asked the Minister for Finance if his attention has been drawn to the cash-flow pressure being put on small businesses within the drinks industry following the increase of excise on wine by 62% in less than a year between December 2012 and October 2013 (details supplied); and if he will make a statement on the matter. [38194/14] 

Minister for Finance (Deputy Michael Noonan): I propose to take Questions Nos. 192 to 195, inclusive, together. 

The increases to excise duty on alcohol in Budgets 2013 and 2014 must be seen firstly in the context of the Government's need to raise revenue to provide services.  Secondly, these increases should not be viewed in isolation but together with the history of excise rates on alcohol in Ireland.  To this end I would remind the Deputy that excise duties on alcohol were reduced significantly in Budget 2010 and also that the rate of duty on spirits and beer remained largely unchanged between 2002 and 2009.  I would also point out that a relief of 50% of excise duty on beer is provided for smaller breweries producing under 20,000 hectolitres of beer per annum. This is an important measure that supports employment in small breweries throughout the country. 

I am aware of the important role played by the drinks industry in providing employment along all points of the production chain, including distilleries, breweries, and public houses. In this regard, the Government has introduced a number of measures to maintain and create jobs in the broader tourism sector, of which the pub trade is an important component. In July 2011, the 9% reduced VAT rate for tourism related services was introduced as part of the Jobs Initiative. The reduced VAT rate, due to expire on 31 December 2013, was retained as part of Budget 2014. This decision was taken in recognition of the importance of the tourism sector to the overall economy and also in recognition of the success of the initiative in helping to create many new jobs, as well as protecting existing jobs. The 9% reduced rate applies to the supply of food and drink (excluding alcohol, soft drinks and bottled water) in the course of catering, which of course benefits the pub trade. In addition, Budget 2014 provided for the abolition of the Air Travel Tax. This measure was designed to increase the number of tourists coming to Ireland, thus benefitting the broader hospitality sector, including the pub trade. 

These tax policy initatives, combined with other measures such as investment in tourism infrastructure like the 'Wild Atlantic Way', have begun to bear fruit. Figures from the Central Statistics Office indicate that in the period June August 2014, the total number of overseas trips to Ireland increased by 9.7% to 2,484,000, an overall increase of 219,200 compared to the same period twelve months earlier. 

The nationally representative price (as measured by the Central Statistics Office) of a can of lager purchased in the off trade increased from €1.77 in 2003 to €1.98 in 2014. In the same period the excise imposed on such a product increased from €0.43 to €0.48. The price of a pint of lager purchased in the on trade rose from €3.67 in 2003 to €4.67 in 2014, while the excise imposed on such a product increased from €0.49 to €0.55 in the same period. Accordingly, the excise component as a percentage of the price of a pint of lager purchased in the on trade is lower now than it was in 2003, while the excise component of a can of lager sold in the off-trade is broadly the same at it was in 2003. This suggests that excise is not the primary driver of the price differential. 

Finally, I would point out that the percentage increase in excise duty in wine cited by the Deputy is based on using 2012 as the base year. Excise duty on a bottle of wine in 2009 was €2.46, and stands at €3.19 today.  It should be noted that the volume of wine cleared for consumption to end July is 9.2% higher than end July 2013.

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