The kiss of debt

That's enough now: Minister for Finance Michael Noonan presents Budget 2013
That's enough now: Minister for Finance Michael Noonan presents Budget 2013

Fionnuala Carolan asks why the government fails to take well thought-out suggestions from groups such as the CSNA and NFRN on board

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18 December 2012

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That's enough now: Minister for Finance Michael Noonan presents Budget 2013

That’s enough now: Minister for Finance Michael Noonan presents Budget 2013

Our wonderfully-timed Budget had the effect of striking fear into every business and household in the country for the few weeks preceding its announcement and then put all major shopping purchases on hold for another week while people digested what it actually meant for their finances. While consumers were already shopping tentatively before 5 December, they are certainly sticking strictly to their budgets now while they contemplate how in God’s name they will afford a property tax on top of everything else next year. There are always those who will ignore the new reality and go all out for Christmas, but most will be determined that this holiday season will not leave them riddled with more debt, which they will be forced to face in January. 

So while consumers were aggrieved by certain measures in the Budget, small retailers were even more so with the increases in the price of tobacco and wine. The increase in the price of cigarettes has come as a blow to the industry, especially small newsagents where cigarettes can account for up to 40% of their sales. Consistent lobbying by numerous groups like the CSNA and the National Federation of Retail Newsagents (NFRN) seems to have fallen on deaf ears. Retailers have explained to the government that each time the price of tobacco is hiked up, it only serves to fuel the already dire black market trade.

Even more frustrating for retailers is that the likes of the NFRN is proposing possible solutions to combating illicit trade but the government seems to be reluctant to enact these new measures. I attended the NFRN’s Executive Committee Meeting in the past month to hear president Joe Sweeney pitch a new idea about how to combat the tobacco problem to the Minister for Small Business John Perry. Sweeney proposed creating a smart phone app that could read the barcode on cigarettes to identify whether the product had duty paid on it thus revealing whether it was a legal product. The price of creating this app is less than €10,000 and the association is proposing to cover the cost. You’d think the government would jump at the idea but while the Minister listened and took it on board, he did not seem convinced. While it might not be a total solution to the problem, it would help consumers and gardaí to easily identify legal products and it’s surely worth a try. 

Members of the executive also took the opportunity to explain to the Minister that if the plain packaging of cigarettes, that has been introduced in Australia, was to be introduced here, it would again play into the hands of criminals making it easier for them to pass off illicit cigarettes as real. Their pleas were obviously ignored when 10 cent was added to a packet of cigarettes and 50 cent on to a packet of roll your own tobacco. Targeting cigarettes is an easy decision for the government but considering the amount of revenue they are losing through illegal products that pay no tax at all, you would imagine that it would be an issue of grave concern.
Our interview with Frank Gleeson (page 18) from Topaz revealed similar findings. Through his position as chairman of Retail Ireland he has spent a huge amount of time lobbying the government on solutions to the illicit tobacco and fuel problems over the last year but feels frustrated by how slow things move in government.

The off-licences are also disillusioned with the government over the €1 excise duty hike on a bottle of wine in the budget. As Dan White explains in his article on page 16, this is essentially an off-licence tax because the majority of wine bottle sales happen in the off-trade as opposed to the on-trade. This is a 40% increase in wine duty which no one saw coming down the track. NOffLA has described it as a disappointing and irresponsible decision that will do nothing more than drive shoppers back over the border. 
While we can find some small comfort in the fact that the next budget is a whole year away, the show must go on so it is business as usual as we again have to accept these drastic measures brought upon us. Hopefully the last few shopping days before Christmas will prove fruitful.

From all in ShelfLife, we would like to wish you all a very happy Christmas and a peaceful new year.

Fionnuala Carolan,
Editor.

 

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