NOffLA speaks: Curb VAT and excise on alcohol
Chairman Jim McCabe called on the Minister for Finance not to use the mini budget to do further damage to the sector
17 April 2009
“We are facing an extremely difficult set of economic circumstances and it is clear that we are in for a difficult number of years,” were the words of Minister for Finance Brian Lenihan at a recent Dáil debate.
A description which is, in all likelihood, an understatement of the difficulties in which we find ourselves. The forthcoming budget will contain measures that will severely impact on many sectors of Irish business.
However, the independent off-trade has been seriously affected by several aspects of the recession and by the fallout of other government decisions.
NOffLA Chairman Jim McCabe has written to the Minister, making the case for the Irish independent off-licence sector and proposing a responsible and realistic initiative. While McCabe acknowledged the difficulties experienced across all sectors of the economy, he explained that: “Our own sector is being especially hard hit as a result of high excise duties, the sterling-euro currency differential and the irresponsible trading of alcohol by the large multiples who merely view it as a means of gaining footfall in their stores.”
By way of illustrating the severity of the situation, the letter pointed to recently-published figures, such as: the €700 million lost in cross border shopping as a result of the December VAT increase; the decline in alcohol sales in 2008, the worst in 25 years; the 13% of the population that travelled to Northern Ireland in December, principally to purchase alcohol; and the €72 million in lost VAT and €40 million in lost excise duties that cross-border shopping will cost the State in 2009.
700 jobs lost already
Most dramatic, and frightening, among the numbers outlined for the Minister in the NOffLA chairman’s letter is the fact that over 700 jobs have been lost in the independent off-licence sector already in 2009. Echoing the Minister’s words, McCabe acknowledged: “It is clear that you need to make difficult and unwelcome decisions in the forthcoming mini budget,” but he also cautioned against “diminishing returns in the collection of alcohol taxes” and that “it is imperative that you reduce excise duty and VAT on alcohol.”
Obviously, such a move could be seen as facilitating cheaper access to alcohol and the inherent dangers associated with alcohol abuse and misuse. With that in mind, NOffLA has submitted an innovative budgetary proposal to the Minister: “Reduce VAT and excise duties on alcohol but at the same time announce in consultation with the Departments of Health and Justice the introduction of a minimum price per unit of alcohol not unlike what the UK is investigating at present.”
The NOffLA proposal would effectively deal with several aspects of changes in alcohol pricing: “In this way you will achieve extra or at minimum lost tax revenue and go some way towards helping the responsible selling of alcohol which you yourself were most eager to achieve this time last year. In addition to this the minimum price per unit will remove the anomaly of traders using their VAT inputs to defray the cost of below cost promotions.”
The Minister has invited proposals from industry to inform his budgetary strategy in the most challenging times ever to face our economy. NOffLA, on behalf of the independent off-trade, has offered a solution which addresses many concerns facing the sector in 2009, and which addresses the Minister’s budgetary concerns in a clear and focused manner.
If you have any queries regarding NOffLA membership or services, please contact our Administrator, Reggie Walsh, at Block D, Unit 6, Nutgrove Office Park, Rathfarnham, Dublin 14, by telephone on 01 – 296 2326, by fax on 01 – 296 2451 or by email at email@example.com. The NOffLA web site can be found at www.noffla.ie
Dates for your diary
22 AGM, Red Cow Hotel, Dublin
4 Public Holiday
NOffLA AGM, 22 April
NOffLA members are reminded that the association’s 16th annual general meeting will take place at the Red Cow Moran Hotel Business Centre on Wednesday 22 April at 7.30pm. Registration forms should be returned to the NOffLA office before 17 April.