The Licensed Vintners Association (LVA) has said the Government has the opportunity to use a “straightforward option” in cutting excise duty as the hospitality sector faces major, rising cost pressures.
The LVA made their comment following the publication of the new Estimation of Costs of Doing Business in the Hospitality Sector: 2022 and 2023 report from the Drinks Industry Group of Ireland (DIGI).
The report showed that electricity prices for Irish businesses are 60% higher than EU average, business gas users experienced a price increase of just under 24%, while the industry also faces inflationary pressure across food products, meat products and dairy.
“This report showcases the many practical difficulties facing pubs and the rest of the hospitality sector in the battle against inflation,” said Donall O’Keeffe, Chief Executive of the LVA. “The report captures how far prices have already risen and that is before the recently announced additional energy price rises kick in. Coupled with the widespread inflationary pressures facing the economy there is likely to be significant cost increases over the rest of this year and into 2023.
“That is why reducing excise duty is a straightforward option available to the Government to alleviate some of this pressure. We already have among the highest levels of alcohol excise in Europe so there is plenty of room for manoeuvre here. A 7.5% cut in excise duty in the coming budget will help to stem the pressure facing pubs and other hospitality premises serving alcohol, creating greater room for absorbing all these other inflationary costs.
“This could be a strong and effective bulwark against hospitality inflation and we hope the Government will recognise it as such in the coming Budget.
“We have been actively engaging with the Government on this matter and also on the issue of energy price rises. It would seem the increases outlined in the DIGI report might only be a drop in the ocean compared to what may be coming. We believe it is essential that measures are adopted that will see grant assistance provided on energy costs as well as price certainty if businesses are to successfully navigate this inflationary period. This is something the Government must act on in the Budget in two weeks’ time,” Mr. O’Keeffe concluded.