Wine merchants and restaurants in Ireland have been left reeling by the government's shock decision to put a €1 tax increase on a bottle of wine from midnight on Thursday.
‘A further burden’: tax increases
The news, part of Irish Finance Minister Michael Noonan’s 2013 Budget announcement, sparked a rush of panic buying in the country’s wine shops on Wednesday night, with some stores reported as doing one week’s trading in an afternoon.
Describing the 40% tax increase as ‘savage’, the Restaurants Association of Ireland said the hike in excise duty would bring a lot of restaurants ‘to their knees’.
‘Most restaurants are simply struggling to survive, especially those outside the major cities,’ said Adrian Cummins, association chief executive.
Meanwhile, DIGI (the Drinks Industry Group of Ireland) voiced ‘extreme disappointment’ at the news, claiming that any revenue raised by the tax increase would be offset by market declines, job losses and a potential return to cross-border shopping.
DIGI chairman Kieran Tobin pointed out that total employment in the drinks industry had been nearly halved by the recession to 60,000, with pubs and bars suffering a 35% sales decline.
‘In this context, the excise increases announced today simply further the burden on pubs, bars, restaurants, hotels and independent off-licences, and put more jobs, businesses and livelihoods at risk,’ he said.
However, alcohol excise tax on beer, cider and spirits was increased by only 10 cents in the Budget.
Three years ago, the Irish government reduced excise duty by 20% in the 2010 Budget, described at the time by DIGI as a ‘crucial first step’ in building consumer confidence and cutting cross-border shopping.
Written by Richard Woodard