Alcohol cuts are toast of the town but raise health fears
PUBLICANS and drinkers were last night toasting a Budget that will knock sizeable sums off the price of alcohol.
Finance Minister Brian Lenihan yesterday announced cuts in excise that will reduce duty on spirits by around €2.75 per bottle, beer by 12c per pint and wine by 60c a bottle.
But he warned the drinks industry that he would reverse the cuts if they are not passed on to drinkers.
“If I find this reduction has not been passed on to the consumer I will reverse today’s reduction,” Mr Lenihan said.
The industry said the cuts would narrow the price gap with Northern Ireland, which has sent consumers flocking across the border to shop.
Mr Lenihan said that his aim was to help the retail sector and “reduce consumption taxes, which are among the highest in the European Union”.
This would protect government revenue and stem the flow of cross-border shopping.
The excise cuts are on a scale well in excess of the usually modest changes to the old reliables, and Mr Lenihan left taxes on cigarettes unchanged.
Retailers said that the cuts amounted to a 20pc cut in duty levels and the sector would also benefit from yesterday’s announcement in Britain that UK VAT rates would be increased from 15pc to 17.5pc, whereas Irish VAT has been reduced from 21.5pc to 21pc.
The Vintners’ Federation of Ireland said there were 90,000 people working in the drinks industry, most of them in pubs, and this move would help maintain jobs and attract tourists.
“While price is the sole domain of each individual publican, our expectation is that consumers will benefit from these measures without delay,” said VFI president Val Hanley.
The Drinks Industry Group of Ireland warmly welcomed the changes and said they were “very confident” the full excise cuts would be passed on immediately to consumers, and the entire retail sector would benefit, as alcohol was a key driver of cross-border shopping.
Vulnerable
Irish Distillers Pernod Ricard, which makes Paddy, Jameson, Cork Dry Gin and other drinks, welcomed the Budget move and said they would pass it on in full with immediate effect, urging retailers and publicans to do likewise.
But Alcohol Action Ireland (AAI) said they were shocked that excise on a luxury good was being slashed as supports to the most needy were cut, and when over half Irish drinkers already take harmful amounts.
“Cutting excise on alcohol won’t put food on a family’s table, won’t put clothes on a child’s back and certainly won’t support the most vulnerable in our society,” said AAI director Cliona Murphy.
Dublin Chamber of Commerce said the excise reduction would benefit retailers who lost out from shoppers heading north, levelling the playing field, in particular, for the capital.
Employers’ body Ibec’s retail and food divisions both welcomed the move claiming that every 150 shopping trips to the North by consumers cost another job in retail, with 11,000 jobs lost in the sector already this year, along with €900m worth of grocery sales.
The Irish Heart Foundation and Ash Ireland slated the decision to leave cigarette prices unchanged, as price was the biggest incentive to get smokers to quit or discourage young people from taking up the habit.
Mr Lenihan said he had not increased excise on tobacco “because I believe the high price is now giving rise to massive cigarette smuggling”.
He said that, early in the New Year, he would explore what further measures were needed to stem cigarette smuggling.
- Aideen Sheehan
Irish Independent
