Sugar tax escape is sweet but wine levy rankles

The food and drink sector breathed a sigh of relief when the sugar tax did not materialise. But the sector knows sugar and fat taxes have not gone away as the debate about obesity intensifies.

Ibec’s Food and Drink Industry Ireland said it was disappointed at the €1 increase in excise duty in the price of a bottle of wine and expressed concern that people would travel across the Border to buy alcohol, and then do the rest of their shopping while they were up there.

The Restaurant Association described the excise duty increase as “savage” and said it would hit restaurants at a time when consumer spending was “on the floor”. The association’s president Brian Fallon also expressed dismay at the Government’s refusal to take up its plan to train chefs. Because of a shortage of chefs, the association has drawn up a plan for a professional cookery apprenticeship scheme which would take 220 long-term unemployed people off the Live Register.

He said he had taken the plan to Fás and the Government “and both have rejected the needs of an entire industry. The programme is ready to roll out, at a much reduced cost than what the colleges are using to train them but we are not being heard”.

Ibec’s head of consumer foods Shane Dempsey said the cuts would hit spending at the very time when the food and drink industry would be expecting a bumper trade.

“Overall it’s hard to describe the Budget as anything other than difficult,” he said, but despite that, there were “glimpses of some useful measures”. Dempsey said the provision allowing for the early release of AVCs (additional voluntary contributions to pensions) might encourage spending.

The relief from excise duty on auto diesel for licensed road hauliers was also welcomed by the agri-food sector. Minister for Agriculture Simon Coveney said it would reduce the cost of diesel by about 7.5 cents per litre. “The cost of transport on average within the agri-food industry to businesses is about 16 per cent, which is much higher than most other sectors,” he said.

He also highlighted an expansion of the foreign earnings deduction scheme which gives tax relief to companies placing staff abroad in countries such as Brazil, Russia, India and China. Coveney said he had been lobbying the Department of Finance for some time to extend the scheme to African countries.

“A lot of people don’t know it, but the second biggest buyer of Irish cheese is Algeria. They bought more than €40 million of Irish cheese last year and growing, and we see African markets as very, very exciting.”

Countries included now include Egypt, the Democratic Republic of Congo, Algeria, Kenya, Senegal, Ghana and Tanzania.