Ireland's alcoholic drinks industry is pushing for a cut in excise duty of up to 20% in the Government's 2010 Budget, to help relieve pressure on the sector during the country's recession.

The industry is calling for "significant cuts" on duty tax as the Government prepares to unveil its 2010 Budget next month, Alex Ricard, head of Pernod Ricard subsidiary Irish Distillers, told just-drinks late last week.

Ministers have warned that the 2010 Budget will have to be one of the toughest in recent memory if Ireland, one of the worst-hit EU countries in the economic downturn, is to rebalance public finances.

Drinks industry leaders have argued, however, that a further rise in excise duty to plug the hole in finances will be counterproductive.

Government revenue from tax on spirits has fallen 22% so far in 2009, compared to the same point in 2008, according to Irish Distillers, which produces the Jameson whiskey brand.   

"Ireland already has the most penalised drinks industry in the EU," Ricard said. "The industry is going to ask for significant cuts in excise duty and by that I mean double digits. They should give it some serious thought."

Ricard said part of the Government deficit on tax receipts is explained by a growing number of consumers travelling to neighbouring Northern Ireland, part of the UK, to buy drinks. Prices are lower in the north due to a lower tax rate and the weakness of sterling against the euro currency.

Trade body Drinks Industry Group of Ireland said in September that cross-border trade, coupled with rapidly declining general consumption, were having a "major impact" on the industry and the 90,000 jobs it provides.

Ricard said that economic conditions are expected to remain tough in the Republic of Ireland. "The economy is heading for an 8% drop in 2009, and there is a predicted 3% drop next year," he said. "That will mean that close to 15% of Ireland's economy has evaporated in the last two-and-a-half years."

Worldwide sales of Irish Distillers' Jameson whiskey brand, however, have continued to grow, rising by 8% in value and 2% in volume on an organic basis in the 12 months to the end of June.

Going forward, given the state of Ireland's domestic economy, Ricard said the country will rely more heavily on exports for growth. "The recovery will come from export-led businesses," he said.

Read the full just-drinks interview with Alex Ricard next month.