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Home > Open letter to an Taoiseach & Tánaiste calling for no VAT reduction on alcohol products.

[Alcohol Action Ireland] Open letter to an Taoiseach & Tánaiste calling for no VAT reduction on alcohol products. (13 Jul 2020)

URL: https://alcoholireland.ie/open-letter-taoiseach-ta...


Taoiseach and Tánaiste

 

There has been much media discussion in recent days of a campaign by the alcohol producers, and the licenced premises businesses, to have a reduction of the rate of value added tax for On-Trade alcohol products included in the forthcoming ‘Stimulus Package’. We understand that the proposed measure would likely cost the exchequer €143 million.

 

Alcohol Action believe this idea to be an inappropriate government measure, given that public health alcohol policy, articulated within the legislative measures of the Public Health Alcohol Act, 2018, seeks to encourage a twenty percent reduction in whole of population alcohol consumption. The recently agreed Programme for Government: ’Our Shared Future’ reaffirms its measures. Its strategic intent is to reduce the impact of alcohol related harm, improve public health outcomes, lessen the socio-economic burden on society and protect children from early initiation of alcohol use.

 

You have been courageous advocates of this public health policy to reduce the debilitating impact of alcohol in our society. In the past, as Minister for Health and as Taoiseach, you have both noted the corrosive impact of ‘alcohol related problems cost to Irish society’ and that ‘alcohol is the main drug of abuse in Ireland’.

 

The idea that, as a society, we would now choose, albeit in difficult economic circumstances, to subsidise the sale of alcohol seems to be especially irrational.

 

Small to medium sized licenced premises certainly face a difficult COVID trading environment and many will struggle to survive without support. However, reducing the VAT rate for alcohol On-trade products will not resolve their trading difficulties and certainly will do little for our societal alcohol problem. The annual cost of that problem to the nation is approximately €3.6bn; every euro gathered in VAT from alcohol in Ireland is met by three euro of public expenditure to manage the harm. The proposed subsidy of €143m would go some way to improving the accessibility to scarce public treatment for alcohol use disorders.

 

The forthcoming stimulus package provides government with many other opportunities to tailor direct business and employment supports for small to medium enterprises across the hospitality and tourism industry. In this respect, we note the comments of the Governor of the Central Bank, Gabriel Makhlouf (Sunday 12 July) who, in expressing some scepticism for using tax to provide support from government, suggested direct supports were more effective and efficient.

 

Equally, it must be noted that there are abundant reserves of free cashflow on the balance sheets of the five major alcohol producers that dominate the Irish alcohol market, to provide temporary credit supports to their Illiquid selling agents.

 

The COVID crisis demands a multi-faceted suite of measures to manage the public health and socio-economic impact. We trust that you will not look to Ireland’s hypermarket for alcohol as a source of sustaining demand but instead stand firm with public policy that seeks to curb the sale of alcohol and so achieve better public health outcomes.

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