Excise cuts are best for big business, not local pubs

The multinational drinks companies would benefit exponentially from an excise cut

After dispatching a fine pint of ale recently, I spied my beer mat through the bottom of the empty glass. "Support your local," it exhorted, "reverse excise: create jobs." The mats are part of the increasingly vocal campaign by the Drinks Industry Group of Ireland (Digi) for a budget cut in excise duty on alcohol.

Support your local? Support your local multinational drinks behemoth, more like. Even a swingeing cut in excise would give only a small boost to pubs, which are responsible for the biggest chunk of the 92,000 jobs my beer mat tells me are supported by the drinks industry.

The multinational drinks companies that are the driving force behind Digi, however, would benefit exponentially from an excise cut. How clever of them, then, to sell their budget message under the guise of a boost for “locals”.

Excise is a volume tax – €22.55 for each percentage point of alcohol on a hectolitre (176 pints) if it’s beer. Logically, the biggest beneficiaries of a cut would be companies who are solely focused on shifting high volumes – the big brewers.


A pint of Guinness - 4.2 per cent alcohol – includes about 54c of excise, before VAT. That’s between about 10 and 15 per cent of the price of your pint, depending on where you live. The 23 per cent VAT is the real killer tax on a pint of plain, not the excise. Wine, it must be said, is hit disproportionately harder.

Even if excise was hacked by a third – and the Government wouldn’t sanction that, even if the whole Cabinet spent the next month on the sauce – it would knock only about 22c off a pint, after VAT.

In a top Dublin pub, you’d still be paying more than a fiver for a lager. If you were drinking in the Temple Bar, one of the dearest joints in town, you’d still be paying over €7 (and €2.50 for a packet of crisps!).

Contrary to what the Support Your Local campaign says, excise hikes since 2011 contributed little towards the demise of pubs. It also forgets that excise was cut by 20 per cent in 2010, and before that, was static on beer for 15 years.

The real reason so many pubs closed – one in 10 since 2007, a similar closure rate to the UK – is because of cultural shifts, such as more home drinking. There is also a huge over capacity problem – Ireland simply has far too many pubs.

With about 7,500 pubs in Ireland, we have one for every 610 citizens. The British Beer & Pub Association estimates there were 49,433 UK pubs in 2012, one for every 1,300 people, proportionally half as many pubs as Ireland. In New Zealand, which has a similar population to Ireland (and Kiwis like a gargle too), they have a quarter our number of pubs.

An excise cut is a blunt instrument that would stimulate minimal extra demand, and employment, in individual establishments where it’s needed most.

Do you really want to support your local? Then lobby councillors to slash the extortionate rates levied on pubs and restaurants. Convince your old-fashioned “local” to innovate with a good food menu. Pester your TD for more incentivised rural transport schemes, so old folk can get home without driving.

Now, that would be worth raising a glass to.