IRELAND: High tax sinks Government spirits revenue
High duty tax has caused the Irish Government's revenue from spirits sales to fall by a quarter in 2009, the Irish Spirits Association has warned as ministers prepare the country's 2010 Budget announcement.
Government revenue from spirits sales is down by nearly 27% for the nine months to the end of September, following an 8% fall in 2008, the Irish Spirits Association said today (7 December).
All sectors of the Republic of Ireland's drinks industry have united to pressure the Government to lower excise tax on alcohol in its 2010 Budget, which will be unveiled on Wednesday (9 December).
They argue high excise tax has exacerbated a tough operating climate for drinks firms in Ireland's recession and has also fostered a sharp rise in consumers crossing the border to buy drink in UK-controlled Northern Ireland, where lower tax means it is cheaper.
"Bottles of spirits on sale in Northern Ireland are significantly cheaper than in the South, sometimes up to EUR10 (US$15) per bottle," said Irish Spirits Association chairman Jim Breen.
Drinks producers want a 20% cut in excise duty in the 2010 Budget, but ministers are under pressure to plug a hole in the country's finances amid one of the worst recessions on record.
"For the domestic spirits industry the impact is profound. We cannot sustain declines on this scale, and job losses will be inevitable," said Breen. "For Government, they must recognise that they are haemorrhaging significant excise and value added tax revenues to the British Exchequer."
Ireland has the second highest excise tax on spirits among the EU's 27 member states, according to trade body the European Spirits Organisation (CEPS). Only Sweden has a higher tax rate, as of 1 April 2009.
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