Ken O'Flynn (Cork North-Central, Independent Ireland Party)
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233. To ask the Minister for Finance if consideration is being given to the introduction of a draught rebate or excise/VAT relief scheme for rural public houses; the estimated Exchequer cost of such a scheme; the alternative supports being planned to protect rural pubs as social and cultural hubs in communities; and if he will make a statement on the matter. [51017/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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Excise duty on alcohol is governed by EU law, with which Irish excise law is obliged to conform. The “Alcohol Structures Directive” (Council Directive 92/83/EEC) lays down a harmonised approach to excise duties on alcohol in the EU. It defines alcoholic beverages and sets out the basis on which excise duties on such products are to be established by Member States as well as the conditions for the application of reduced rates and special regimes. In Ireland, the excise duty takes the form of Alcohol Products Tax (APT) as provided for in Chapter 1 of Part 2 of the Finance Act 2003 (as amended).

The rate of APT applying to a particular alcoholic beverage depends on the category it falls within and its alcohol content which is expressed as the percentage of volume. Reduced APT rates can only be applied in limited circumstances, the main ones being for lower strength products and for independent small breweries or producers of cider and perry, and these types of relief, which are allowed under the Directive, have already been introduced into Ireland's legislation as a feature of our APT regime.

The Directive does not allow scope for the taxation of alcohol to be based on packaging format (such as different rates for kegs versus bottles or cans) nor on the point of consumption (such as different rates depending on whether consumed in rural public houses or licensed premises generally). Therefore, an excise rebate in respect of draught alcohol sold in rural public houses would not be compatible with the Alcohol Structures Directive.

The VAT rating of goods and services is also subject to the requirements of EU VAT law, with which Irish VAT law is required to comply. In accordance with the EU VAT Directive, the supply of alcohol is subject to VAT at the standard rate, which in Ireland is currently 23%. There is no provision in EU VAT law for the introduction of a VAT relief scheme for rural public houses.

As the Deputy will be aware, in making any decision in relation to taxation measures, the Government must balance the costs of the measures in question against their impact and the overall budgetary framework.

While I recognise the difficult circumstances businesses in this sector find themselves in, the Government has taken additional measures to support businesses directly. For instance, Budget 2024 and Budget 2025 contained a number of measures to support businesses facing increased costs, including the Increased Cost of Business (ICOB) grant in Budget 2024 and the Power Up Grant of €4,000 in Budget 2025.

As stated in the Programme for Government, this Government proposes to bring forward measures to support small and medium enterprises (SMEs), in particular the retail and hospitality sectors, acknowledging the increased cost pressures on these sectors. These measures will be implemented as part of the normal budget process as resources allow.