Irish drinkers pay highest amount of tax on pints out of 25 EU countries

Irish drinkers pay the highest amount of tax per pint out of 25 countries in the EU and also the UK, a new report has found. 

A Drinks Industry Group of Ireland (DIGI) report, 'Tax on Drinks: What Irish v EU and UK Consumers Pay', written by Dublin City University economist Anthony Foley, shows that Irish people pay more tax on a pint than 25 EU members states and the UK.

The report, which was launched on Thursday, compares Ireland’s excise rates against the UK and 27 of their EU counterparts.

Ireland continues to have the second-highest overall excise tax on drinks in the EU and UK, the highest excise tax on wine, the second highest on beer, and the third highest on spirits.

Despite Ireland’s renown for the production of some of the world’s most popular drinks products, the Irish government levies a tax bill of almost €12 on a bottle of off-licence-bought Irish whiskey produced in an Irish distillery.

The tax on the same bottle in Spain is only €2.69.

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The excise per half glass of spirits ranges from €0.69 in Finland and Sweden to €0.08 in Bulgaria, with 15 countries imposing an excise tax of less than €0.20. In Ireland, the level is €0.60. A tax of €0.54 cents is applied on a pint of Irish stout served at a pub, restaurant or hotel.

The Irish level of excise per pint of beer is €0.55, in comparison to 21 EU countries who have a beer excise per pint of less than €0.20. In Germany, it is just €0.05 cents.

In France, a country equally renowned for their drinks industries, excise tax rates on wine are far lower. The tax on a glass of wine in Ireland is €0.80 cent while in France, it is €0.01 cent.

Commenting on the report findings, a DIGI spokesperon said that Ireland’s high excise rates represent another high business cost for the hospitality sector and Irish consumers at a very challenging time.

The group is calling on the Government to reduce the excise tax rate in Budget 2023 by 7.5%. This should be the start of a programme of annual excise reductions to gradually bring Irish drinks excise tax in line with the much lower EU levels across Budget 2023 and 2024.

DIGI says that Ireland's high excise tax on drinks products, combined with soaring energy costs, increasing interest rates, high commercial rents, VAT – which is 23% and payable in addition to excise tax – and insurance is putting the industry under added and severe pressure and only compounding the challenges.

Similarly, as consumers increasingly find it difficult to deal with the effects of the cost-of-living crisis, our high excise rates is yet another tax they are levied with.

Chair of DIGI and Communications and Corporate Affairs Director at Irish Distillers, Kathryn D’Arcy said: “The high level of excise duty levied on spirits, wine and beer spirits is a concern for consumers and hospitality businesses as they face into a deepening cost-of-living crisis. As the costs of production for drinks producers are rising and consumers’ disposable income is also diminishing, we will see a downward shift in demand among consumers which will pose another challenge to the longer-term sustainability of the hospitality sector.

“Ireland has the second highest overall excise tax rate in the EU27 and the UK, second only to Finland. Such high tax rates decrease the competitiveness of the Irish market when seeking to entice tourists to Ireland and inflict an undue cost on hospitality businesses and consumers.

“Irish hospitality businesses have only begun the recovery since the closures necessitated by the Covid pandemic and are now faced with a paralysing cost of living and cost of doing business crisis. There are many challenges facing the sector right now and we must seek to provide support, particularly as it applies to business costs. The Government must ensure our tax policies adequately account for this and ensure the long-term sustainability of the sector.

“We are calling on the Government to reduce the excise rate by 15% across a two-year period - 7.5% in 2023 and 7.5% in 2024 - to help support the hospitality sector reduce its cost-burden and to ease the cost of living for consumers. As energy costs and other input costs rise, we need to offset these costs through a reduction of taxes and tariffs such as excise duty which could be implemented overnight.”

Commenting on DIGI’s report, economist and Associate Professor Emeritus, DCU Anthony Foley noted: “The data once again clearly demonstrates the very high levels of alcohol excise in Ireland compared to our EU colleagues which, of course, places a relatively large burden on the Irish drinks industry and consumers compared to other EU members.”