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Beer tax hike to give Govt a hangover

Monday, January 28 10:55:04

The Government's decision to raise beer excise rates by 22pc will not only impact on consumers but will also have knock-on adverse effects for the wider agriculture sector, according to the Irish Brewers Association today.

The analysis was carried out by the Association in response to the Budget announcement, which also saw excise increases in cider, spirits and wine.

It said that the excise rise means that consumers are now paying an additional 15 cent in tax on each pint sold in an Irish pub, when compared with December 2011.

This is made up of an additional 5 cent in VAT on top of the 10 cent in excise announced by the Government.

Its analysis also shows that the brewing sector continues to provide more than E300 million in revenue for the State with a further E400m invested in the production, marketing, export and retail of beer.

The VAT and excise increases ofJanuary and December 2012 respectively will have the biggest impact on the pub sector and will damage domestic demand and have a knock-on effect on sectors providing raw materials and other resources required for the production of beer, the industry body asserts.

It called on the Government to closely monitor the impact of the excise increase in the early months of this year, and to reverse the cut at the earliest opportunity.

"The Irish brewing industry currently purchases over 170,000 tonnes of malted barley from Irish farmers each year for use in the brewing of beer. This in turn supports over 3,000 farming families all over Ireland making it one of the most important sectors within the drinks industry in terms of indigenous manufacturing," said Chairman of the IBA and Country Director of Diageo Ireland, David Smith.

"At a time when domestic beer consumption is falling by roughly 2pc year-on-year, we estimate that the recent draconian increase in excise will put serious pressure on IBA members and will inevitably impact on those supplying the brewing industry. While Irish beer products continue to perform strongly internationally, the domestic market has been declining in recent years."

"The IBA is disappointed that the Government is putting further unnecessary pressure on our sector and its suppliers at a time when it should be supporting large domestic enterprise which sources its raw materials and services from indigenous suppliers. The IBA therefore calls on Government to engage with the IBA and its members and the wider agriculture sector to find a way of stabilising and protecting this very important domestic industry," said Mr Smith. (By Joe O'Connor)