Dáil debates

Thursday, 2 October 2014

10:15 am

Photo of Seán KyneSeán Kyne (Galway West, Fine Gael)
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6. To ask the Minister for Finance in view of the pressure on businesses in the hospitality and drinks industry such as local public houses and other businesses such as independent wine sellers and the associated increases in excise duties and taxes on such products in 2012 and 2013, if he will consider reducing the level of excise; and if he will make a statement on the matter. [37051/14]

Photo of Seán KyneSeán Kyne (Galway West, Fine Gael)
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This question relates to concerns among the rural pub trade and independent wine sellers regarding the impact of increases in excise duties over the past number of years on job retention and future job creation and the Minister's plans in this regard in terms of the forthcoming budget.

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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As the Deputy will be aware, it is not my practice to comment in advance on what measures may or may not be introduced in the budget. I do not intend to have a budget debate in advance of its announcement. I cannot be more precise than that.

In general terms, the Deputy will be aware that the VAT rate was reduced from 13.5% to 9%, which would have helped the pub trade, particularly the portion of it that provides food. I have met with representatives of the trade, including the Vintners' Association representing the Dublin publicans and the Vintners' Association representing the rural publicans, and representatives of Diageo who accompanied the Vintners' Association representatives by way of delegation. I am familiar with their concerns and have discussed them with them. We will see what happens on budget day.

Photo of Seán KyneSeán Kyne (Galway West, Fine Gael)
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I appreciate that the Minister cannot engage now in a debate on the budget. Many of us have met with vintners and rural publicans in the context of the ongoing Support Your Local campaign. I acknowledge that the imposition of additional taxes and charges was necessary when the economy was in dire straits. I also welcome the many initiatives taken by the Government over the past number of years in relation to job creation. However, the additional taxes introduced over the past few years are a hindrance on job creation and retention. There has been huge growth in the tourism area over the past number of years, largely because of the many initiatives taken by Government, including the Wild Atlantic Way and the reduction in VAT to 9%. These measures have had a positive affect. While I am aware of the issues around irresponsible consumption, businesses such as those I am speaking about - namely, restaurateurs, independent wine retailers and family-run pubs - promote responsible consumption in a social setting. Future reductions in taxes aside, which I would support, I hope that no new additional burden by way of taxes will be imposed on this sector.

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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Our approach has been to stimulate the industry in general, which included a reduction in VAT, the initiatives of The Gathering and the Wild Atlantic Way and the abolition of the travel tax, which resulted in an enormous amount of additional tourists coming into the country. That has been the general approach.

In regard to excise rates and the percentage charged in this regard in terms of the price of a pint, excise duty is now lower in percentage terms than it was in the early 1990s. There were no excise duty increases for many years. If I remember correctly, excise duty was reduced in 2009 or 2010. The only increase was applied last year. As I said, the proportion of the cost attributable to excise duty is lower now than it was in the early 1990s.

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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The elephant in the room in relation to alcohol is the predatory practises being pursued by the multiples. That is an issue that the Minister's Department will have to address. I accept it is not possible to treat the on-trade, the independent off-trade and the multiples separately in respect of excise duty. However, below-cost selling of alcohol by multiples is damaging to the on-trade, independent off-licences and society. As the Minister will be aware, the licensing system in this area is archaic in that a large multiple in this country pays the same amount, €500 per annum, as a small Centra store for an alcohol licence. It is a crazy system. When shining a light on this area, there must be an examination of the role of the multiples in terms of their aggressive below-cost selling of alcohol, which is what is doing the most damage to the pubs and independent off-licences that are struggling.

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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I was going to make a similar point, but Deputy McGrath has made it well. I will focus instead on the issue of wine as it relates to the question posed by Deputy Kyne. The Minister referred in his reply to excise duty on beer products. Has the Department of Finance undertaken any analysis of wine products, which attract the highest excise duty across Europe? What wine lovers actually get for their €8 or €9 spend on a bottle of wine is very little wine, because a large proportion of that cost relates to excise duty. Has the Department undertaken any research or analysis of the impact of two concurrent increases in excise duty on that sector, which is the issue raised in the question?

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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Social practices have changed significantly. Members will be surprised to hear that of all the excise collected from the drink trade, 23% comes from wine, which is massive. This is derived not from wine consumed in restaurants or pubs but from bottles of wine purchased in supermarkets and so on.

Another curiosity about wine, which applies to all applications of excise, is the charge applies on the volume. The proportional excise charged on cheap wine is very high but the proportion charged on expensive wine is not. The excess goes on the volume, not on the price whereas VAT goes on the price. That is a curiosity. I am conscious of the position of the trade. Many of the problems in the pubs in rural Ireland are not related to price. The Deputy knows the story and knows what is the problem. Social practices are changing as well. In my city, young couples tend to go out for a meal to a restaurant on a Saturday night rather than to the pub. There is quite a change in social practice and that must be taken into account by representatives of the vintners as well.