219. Deputy Aindrias Moynihan asked the Tánaiste and Minister for Finance if his attention has been drawn to the VFI proposed on-trade sustainability scheme as a means of helping rural pubs; and if he will make a statement on the matter. [39880/26]

Tánaiste and Minister for Finance: My Department receives proposals from a wide range of stakeholders in advance of each Budget and all are given consideration as part of the annual policy cycle. I am aware of the submission from the Vintners’ Federation of Ireland (VFI), which outlines a proposal for a payable tax credit for pubs. The proposed payable credit would be linked to the number of draught product kegs purchased by a business, subject to a per premises cap.

Proposals for new tax expenditures are examined by reference to my Department’s Tax Expenditure Guidelines, which outline the Government’s approach to when tax expenditures are best used, noting that these narrow the tax base, and how they should be evaluated.

In the case of a proposal for a targeted tax incentive, such as that put forward by the VFI, consideration must also be given to European State aid requirements. Measures that confer a selective advantage on a specific sector have the potential to constitute a State aid and therefore could not be introduced unless compliant with an existing framework or undertaking a full notification process.

Additionally, any tax credit given to rural pubs, or indeed to all pubs, and which is based on the supplies of alcohol products to those pubs, would potentially be contrary to the Alcohol Structures Directive if its effect, in practice, is to give relief from the rate of alcohol excise paid on alcohol products.

The Alcohol Structures Directive establishes a harmonised framework for the taxation of alcohol across the EU. It does not permit the taxation of alcohol to be differentiated based on the point of consumption. Accordingly, it is not legally permissible for Ireland to apply reduced excise duty rates to alcohol sold in pubs, restaurants, or other licensed premises, as this would be contrary to the requirements of the Directive.

It is worth noting that there has been no general increase in excise duty rates for alcohol since 2014. While the retail price of beer has risen over that period, the excise duty has remained unchanged and, therefore, the total tax as a percentage of the retail price of each pint is now lower than it was more than a decade ago.

The Government is conscious of the challenges facing all businesses in the current economic climate, and the Cost the Business Advisory Forum is working to look at the structural issues that are driving up costs and the steps that could be taken to mitigate them. A range of direct expenditure supports are also available to businesses, and details can be found online on the National Enterprise Hub.

Notwithstanding the above, the matters raised in the proposal will continue to inform ongoing policy considerations in the context of the budgetary process.

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Dáil Éireann debate. Questions 471 - Tax credits [39660/26].

471. Deputy Michael Healy-Rae asked the Tánaiste and Minister for Finance if he will introduce a tax credit to support smaller rural pubs; and if he will make a statement on the matter. [39660/26]

Tánaiste and Minister for Finance: On the subject of the Deputy’s question, I am aware that the Vintners Federation of Ireland have proposed a tax credit for pubs, linked to the number of draught product kegs purchased by a business, subject to a per premises cap.

Proposals for new tax expenditures are examined by reference to my Department’s Tax Expenditure Guidelines, which outline the Government’s approach to when tax expenditures are best used, noting that these narrow the tax base, and how they should be evaluated.

In the case of a proposal for a targeted tax incentive, such as that put forward by the VFI, consideration must also be given to European State aid requirements. Measures that confer a selective advantage on a specific sector have the potential to constitute a State aid and therefore could not be introduced unless compliant with an existing framework or undertaking a full notification process.

Additionally, any tax credit given to rural pubs, or indeed to all pubs, and which is based on the supplies of alcohol products to those pubs, would potentially be contrary to the Alcohol Structures Directive if its effect, in practice, is to give relief from the rate of alcohol excise paid on alcohol products.

The Alcohol Structures Directive establishes a harmonised framework for the taxation of alcohol across the EU. It does not permit the taxation of alcohol to be differentiated based on the point of consumption. Accordingly, it is not legally permissible for Ireland to apply reduced excise duty rates to alcohol sold in pubs, restaurants, or other licensed premises, as this would be contrary to the requirements of the Directive.

It is worth noting that there has been no general increase in excise duty rates for alcohol since 2014. While the retail price of beer has risen over that period, the excise duty has remained unchanged and, therefore, the total tax as a percentage of the retail price of each pint is now lower than it was more than a decade ago.

The Government is conscious of the challenges facing all businesses in the current economic climate, and the Cost the Business Advisory Forum is working to look at the structural issues that are driving up costs and the steps that could be taken to mitigate them. A range of direct expenditure supports are also available to businesses, and details can be found online on the National Enterprise Hub at www.neh.gov.ie.

Notwithstanding the above, the matters raised in the proposal will continue to inform ongoing policy considerations in the context of the budgetary process.