A 92 million euro tax cut can save tens of thousands of jobs

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Ireland can protect tens of thousands of jobs in the hospitality and drinks sector with a 7.5% reduction in excise tax on alcoholic products, says Kathryn D’Arcy, new president-elect of the Drinks Industry Group of Ireland.

Director of Communications and Corporate Affairs at Irish Distillers, Kathryn succeeds Liam Reid of Diageo after his two-year term as DIGI Chair. Kathryn’s first priority is to protect jobs.

DIGI represents Ireland’s beverage and hospitality industries, manufacturers, distributors and retail sectors including Ibec’s Drinks Ireland, Licensed Vintners Association, Vintners Federation of Ireland, Restaurants Association of Ireland, Irish Hotels Federation and National Off-Licence Association.

Before the pandemic, the drinks industry directly employed 92,000 people in Ireland. The hospitality industry has supported nearly 210,000 jobs, buying £1.1 billion worth of Irish inputs each year and exporting £1.25 billion worth of produce each year.

DIGI estimates that a 7.5% reduction in excise duty on all beverages would cost the public purse approximately €92.5 million. Ireland has the second highest overall excise tax on alcohol; it has the highest tax on wine, second on beer, and third on spirits.

“Our priority is to ask the government to do everything possible to protect jobs by bringing Ireland into line with the rest of Europe,” said Kathryn D’Arcy. “If you want to promote Ireland as a great place to visit, we need to make sure we are competitive for those visiting the country.

“We are looking at ways to support the hospitality and beverage sectors in their post-Covid recovery. Visitors can see that they can buy Irish whiskey cheaper in their own country than here. This is due to high tax rates.

In real terms, around €12 on a 70cl bottle of whiskey purchased from an Irish off-licence is an excise tax; a French consumer pays less than €5 in taxes and an Italian consumer less than €3.

Fourteen EU countries do not levy any excise tax on wine. In Ireland, 55c on a pint of lager goes directly to the state, compared to 12c in Belgium and 5c in Germany.

“We have the second highest excise duty in Europe, only Finland is higher than us,” Kathryn said. “Our hospitality sector is highly dependent on tourists coming here. The Irish hospitality sector has lost €12 billion over the past two years.

“Now that tourists are starting to visit Ireland again, we need to look at long-term programs and policies to support jobs in these industries. We also need to look at ways to promote careers in the sector.

“The reduction in excise duty is a policy that can be introduced overnight with an immediate impact on reducing the cost of doing business for tens of thousands of hospitality business owners in Ireland.”

The new DIGI chairman is calling on the government to put in place policy measures that could boost the sector overnight, as hotel business owners experience “a perfect storm of increased operating costs, serious recruitment and their own skyrocketing costs of living”.

Next week, DIGI is due to kick off its 2022 campaign, tackling the pressure the industry is under due to rising costs and seeking political backing from the state.

“In addition to protecting jobs, an excise tax cut would also provide an overnight boost to help business owners deal with soaring costs,” Kathryn said. “Jumps in inflation and the cost of living are having a real impact on hospitality businesses. The excise tax reduction would be so easy to implement that it would give an instant boost to the sector.”

Calling for policies that will support jobs and protect the future of the sector is Kathryn D’Arcy’s No. 1 priority as she assumes DIGI’s presidency.

Kathryn said, “I look forward to taking on this role at such a critical time for the industry. The beverage and hospitality sector has had some of the toughest years in its history, with many closures and limitations on our ability to do business.

“While the industry is optimistic about its outlook in a post-Covid world, it remains very cautious given the immediate and significant challenges of the period ahead.

“Inflation and the cost of living crisis have a huge impact on society. Business owners are experiencing a perfect storm of increased operating costs and serious recruiting challenges as their own cost of living soars.

“We need tangible and actionable supports that are easily implemented. At the heart of this is the introduction of policy measures that can make both an immediate difference and a long-term impact in terms of implementing sustainable policy.”

Meanwhile, sustainability is another key priority for the beverage sector in Ireland. Diageo has plans for a new carbon neutral brewery on a greenfield site in Littleconnell, Newbridge, Co Kildare. The state-of-the-art brewery will be powered by 100% renewable energy and will utilize the latest processing technologies to minimize overall energy and water consumption.

Irish Distillers is investing €50 million over the next four years in projects to make the Midleton Distillery carbon neutral by the end of 2026. Irish Distillers is using new emissions reduction technology to phase out the use fossil fuels to power it. New mechanical vapor recompression (MVR) technology will see a closed-loop system capture, compress and recycle waste heat back into the distillation process. This is the first time that this technology has been used in several batch distillation processes.

Irish Distillers also conducted research with MaREI, SFI Research Center for Energy, Climate and Marine, hosted by UCC, to determine the biomethane potential of distillation by-products and design the anaerobic digestion process required to produce biogas.

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