Retailers’ reaction to Budget 2013
Retailers disappointed by Budget that 'ignores the needs of Ireland's largest industry'
Print5 December 2012
Finance Minister Michael Noonan presenting Budget 2013
Retailers have reacted "furiously" to today’s Budget 2013 announcement by Minister for Finance, Michael Noonan.
From midnight, excise duty is to increase by 10 cent on pints of beer and cider and measures of spirits, and by €1 on a 750ml bottle of wine. The price of a pack of cigarettes is to go up by 10 cent from midnight and in bad news for the roll-your-own (RYO) tobacco sector, the price of a 50g pouch of tobacco is to rise by 50 cent.
The retail lobby group, Retailers Against Smuggling (RAS) which had sought no increase on excise for cigarettes, said that the Government’s actions were entirely counter-productive and would play straight into the hands of criminals.
RAS said that the increase would harm independent retailers the most – as cigarettes and impulse items account for approximately 30% of their sales – and that the decision would lead to a sharp decrease in footfall to their stores.
The group added that the move would cost the State millions in lost revenue by making the black market a more attractive option for consumers.
Aiding the black market
"It makes no sense whatsoever that the Government would increase the price of legal products when black market cigarettes are freely available on the streets of every town and village in Ireland for as little as €3.20," said RAS spokesperson Benny Gilsenan.
Meanwhile, industry body Retail Excellence Ireland (REI) said it welcomed the retention of existing excise rates for diesel, but claimed that in every other respect the Government had ignored the needs of the retail sector.
The organisation had requested that Minister Noonan apply the NAMA Guidelines to all State landlords including IBRC (formally Anglo), Local Authorities, Port Management Companies and The Dublin Docklands Development Authority, yet this was not acted on in Budget 2013.
David Fitzsimons, Retail Excellence Ireland CEO said: "The retention of the 9% VAT rate on labour intensive tourism sectors is good news for those employed in these sectors. Retail Excellence Ireland also welcomes the retention of existing excise duties on petrol and diesel. With the exception of these measures, the Budget ignores the needs of Ireland’s largest industry – retail."
He added that Minister Noonan’s assessment that retail sales are increasing was inaccurate.
Controversial wine excise increase
The controversial move to increase the excise on a bottle of wine by €1 has also been met with dismay in certain quarters.
The Restaurants Association of Ireland (RAI) has said that "the dramatic increase" will hit restaurants at a time when consumer spending is on the floor.
What is more, the association argues that the measure "does nothing to tackle the below-cost selling of alcohol in supermarkets and off-licenses, which has brought restaurants around the country to their knees".
Adrian Cummins, chief executive of the RAI said: "The increase in Excise Duty is another burden restaurants don’t need – one euro on a bottle of wine will bring a lot of restaurants to their knees. Most restaurants are simply struggling to survive, especially those outside the major cities. Budget 2013 was not what they needed to see before Christmas."
Earlier today, Minister for Jobs, Enterprise and Innovation, Richard Bruton, said that Budget 2013 contained a package of "pro-jobs measures."
"The Government in Budget 2013 made the choice to support job-creation by avoiding increases in income tax, and restated the Government’s absolute commitment to the 12.5% corporation tax rate," said Bruton.
The pro-jobs measures spoken of include a new €700million seed and venture capital scheme "to support hundreds of innovative Irish companies" as well as a package of tax measures to support SMEs. These include a 25% increase in the threshold for VAT cash receipts basis accounting, in order to improve cash flow for SMEs. The threshold will be increased from €1 million to €1.25 million.
The Budget will also have a knock on effect on consumers’ household budgets which will make them eager to secure value-for-money when grocery shopping. Irish Times journalist Conor Pope tweeted that "two adults and two kids in a house worth €300,000 with a four-bottle a week wine habit and a 1.6 litre car will be €1,352 poorer next week".
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