The Vintners' Federation of Ireland (VFI) today welcomed the Minister for Finance's decision not to impose an increase in excise duties on alcohol.
VFI chief executive, Mr Tadg O'Sullivan, said the VFI had "hoped for a reduction in the Budget to bring Ireland's excessive tax regime in line with other EU countries but no increase was certainly a step in the right direction".
"Ireland has the 2nd highest tax on wine and beer in the EU and 5th highest tax on spirits. Most prices increases are beyond the control of the publican and we had hoped for some reduction in excise duties to increase competitiveness and improve on Ireland's rip-off reputation," said Mr O'Sullivan.
He said that rural publicans are facing extremely difficult times ahead with the impending smoking ban which has the potential to devastate the rural pub industry.
"However, Minister McCreevy's decision not to further burden the publican has been broadly welcomed," he added.
On the 25 cent increase in a packet of 20 cigarettes, the Office of Tobacco Control (OTC) said that increases in the 'real price' of cigarettes are vital in helping to prevent addiction among children and in helping to reduce tobacco consumption among adults.
In this context, the Office acknowledges that the increase of 25 cent announced in today's Budget represents about a 4.3 per cent increase in the price of 20 cigarettes which is two points above the current rate of inflation of 2.3 per cent.
"International studies have shown repeatedly that increases in the price of
cigarettes result in a decrease in the numbers of children who become
addicted to cigarettes. For this reason we welcome any increase in price
above the rate of inflation, though clearly we would have preferred it to be
higher," Ms Valerie Robinson, OTC director of communications and education
said.
Meanwhile, the Irish Tobacco Manufacturers' Advisory Committee (ITMAC) says it regrets the Minister for Finance again targeting the tobacco industry in the Budget.
ITMAC says the increase in tobacco taxes announced by the Minister will have a four-fold impact:
It will help push up inflation and increase the cost burden on the one third of Irish adults who choose to smoke and may help fuel future wage demands.
- It will lead to a growth in tobacco smuggling. The higher the tax, the greater is the incentive for criminals involved in tobacco smuggling as on-going seizures by Customs & Excise authorities underline. Because Ireland has one of the highest levels of tobacco tax in Europe, ITMAC warns that we are becoming an increasingly attractive target for tobacco smugglers.
- It will increase the attractiveness of Internet sales, especially amongst young people, thereby encouraging the unregulated importation of cigarettes from countries where tobacco taxes are significantly below Irish levels.
By increasing the price of tobacco products, it will have a negative impact on sales to non-residents — especially cross border shoppers who come here from Northern Ireland — and will thereby reduce the amount of excise duty which Government might expect to earn from this trade.