Pub closure rate doubles following tax increase

“Revenue has seized 3.5 times more illegal alcohol in the first seven months of 2013 than it did in all of last year. High excise rates encourage illegal alcohol trade” – DIGI Chairman Peter O’Brien.
“Revenue has seized 3.5 times more illegal alcohol in the first seven months of 2013 than it did in all of last year. High excise rates encourage illegal alcohol trade” – DIGI Chairman Peter O’Brien.

The Drinks Industry Group of Ireland has called for a reversal in the tax increases on alcohol introduced in last year’s Budget as almost a pub a day closes and sales continue to decline.

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11 September 2013

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The rate of pub closures has almost doubled since the excise increase in last year’s Budget. Previously three pubs were closing a week, but since the excise increase almost a pub a day has closed, according to Revenue Commissioners’ data. In its pre-Budget submission to the Minister for Finance Michael Noonan DIGI warned that last year’s tax increases are threatening jobs and tourism and damaging the Government’s tax take.
 
DIGI Chairman Peter O’Brien, 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 of DCU Business School pointed out, “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% in the period, wine by 9% and spirits by 13.5%, beer is up slightly by 2.5%. The domestic drinks market has weakened further in 2013”.

Retail sales volumes in bars in H1 2013 fell 3.8% compared with H1 in 2012.

“There was a small value of bar sales decrease of 1.1% between the two periods alongside the larger volume decline,” stated Tony Foley, “This was mainly due to the higher prices caused by the large excise increases of Budget 2013 and supplier price increases in late 2012 and were not price increases accruing to bar operators’ revenues.”
 
The last 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 the second-highest in the 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.
 
Peter O’Brien added, “Illegal alcohol trade continues to rise. Revenue has seized 3.5 times more illegal alcohol in the first seven months of 2013 than it did in all of last year. High excise rates encourage illegal alcohol trade.
 
“We are calling on government to save small Irish drinks businesses. Employment in the sector has fallen by 3,300. Since the excise increase the rate of pub closures has doubled. Independent off-licence businesses are also in a very weak economic position with closures, declining sales and reducing employment.”

There was a decline of just over 4% in off-licence sales volumes in H1 of 2013.

 

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