25th March 2009

10c increase on alcohol could make €140million to save lives

Alcohol Action Ireland proposes one key recommendation for the supplementary budget and that is to increase excise duty on alcohol. There are two key benefits to such a change:

  • Even a modest 10c excise duty increase would bring in €140m in much needed revenue
  • Increasing the price of alcohol has been proven both internationally, and in previous Irish budgets, to reduce alcohol consumption, thereby reducing alcohol-related harms

In 2007, the Department of Finance’s Tax Strategy Group calculated the anticipated yield of a range of increases on alcoholic products

  • An increase of 10 cents on a pint of beer could yield €83.1m
  • An increase of 10 cents on a half glass of spirits could yield €42m
  • An increase of 10 cents on a pint of cider could yield €12.7m
  • An increase of 10 cents of a bottle of wine could yield €6.6m

Those small increases are estimated to be worth a total of €144.4m to the exchequer. The anticipated yield from the increases proposed could be invested in a number of ways.

  • €9.7m would fund the vaccination of all 12-year-old girls against a virus that causes cervical cancer
  • €15 m would fund a national out-of-hours social work service for one year
  • €7 m would fund special needs classes for the 534 vulnerable children with mild learning disabilities whose needs will not now be met as a result of education cuts earlier this year
  • €145m would provide all children with a free pre-school place for one year on a half-time basis. The place would provide quality, early childhood education and care, investing in our future workforce, and in the potential of all to participate in civil society (NESF costing)

A proportion of the additional revenue could be ring-fenced to fund the implementation, monitoring and evaluation of our potential new national drug and alcohol strategy.

Why increase excise duty?
In the past 15 years, there have only been three increases in excise duty – cider (2001), spirits (2002) and wine (October 2008), the last excise duty increase on beer was in 1994.

Successive price increases have largely been trade/ industry led which means that increased profits have gone to trade and industry while the proportion of tax (vat and excise duty combined) going to the public coffers has actually fallen. Take beer for example, tax as a percentage of price fell from 37% in 1994 to around 29% in 2007.

It is true that Ireland already has among the highest taxes on alcohol in the EU but a recent report from the European Commission’s Department of Health and Consumer Affairs also shows that Ireland is one of the six countries in the EU where the affordability of alcohol has increased by 50% or more since 1996. In other words alcohol as a percentage of wages had become more affordable over the past 12 years. If that fact is combined with the increased number of outlets selling alcohol since 2000 – there we have a combination of increased accessibility and affordability which may go some way to explaining the levels at which we drink at.

It is worth putting into perspective the recent   fall-off in consumption of alcohol in 2008. If we are, as reported, at 1997/1998 levels of consumption, we are still drinking an average of 20% more alcohol per person a year than our European counterparts. It is also worth noting that our consumption level a decade before, in 1986 was 10.1ls of pure alcohol per adult – the equivalent of the European average.

Likewise with the overall number of pubs in the country which is also said to be declining. In reality the number of pubs   in Ireland has actually increased since the beginning of the decade from 7,500 to 9,500 at the end of 2008: there are an extra 2000 more pubs in existence today.

According to the Revenue Commissioners annual reports, 7,500 pub licences existed in 2000. In 2001, however, as a result of a change in licensing laws, more than 11,000 pub licences were issued by Revenue. Following this statistical spike, there was a sharp fall with 1,400 less pub licences by the end of 2002 as the market settled. It should be noted that this market shift occurred in 2002 at the height of the boom and before the introduction of the smoking ban. Likewise, there has been massive growth in the off-sales sector most notably with the advent of retail multiples entering the market.

Click on the link below  to access  a copy of the European report on the link between alcohol affordability, consumption and harms

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