Publicans call for 40% rebate on the excise charged for pints
This comes as the government intends to cut the VAT rate to 9% for food-based hospitality in the next budget. While this is widely welcomed by publicans, the Vintners Federation of Ireland (VFI) has stressed this won't help pubs that don't sell food, especially rural pubs on the verge of closing.
It is proposing that this rebate would be calculated by Revenue and capped at €20k per licensed premises annually. Ireland has the second-highest excise rate on alcohol in Europe, after Finland.
Taxes account for nearly 30% of the price of a pint in Ireland. According to the VFI, this is placing 'severe financial pressure on publics, particularly in rural areas'.
It says the tax rebate would protect rural pubs that play a vital social role in their local communities, while also preserving employment in a sector struggling with soaring costs. VFI Chief Pat Crotty said: 'Publicans are not asking for a handout – we are asking for fairness.
'A 40% rebate on the excise charged on draught products is a practical, targeted support that would make a real difference for small pubs across Ireland. These are businesses at the heart of their communities, providing employment, social connection and play a key role in our tourism offering.'
Mr Crotty said he welcomes the commitment to support the hospitality industry in the new Programme for Government, but traditional pubs are being left without support. He added: 'Rural pubs are facing an existential crisis.
'We have seen hundreds of pubs close their doors in recent years. If this trend continues, we will lose a vital part of Irish culture and community life. A draught rebate is a simple, fair, and targeted measure that would provide immediate relief.
"We estimate the rebate would cost €73m annually, a small fraction of the VAT proposal.' The excise rebate scheme proposes that publicans would provide evidence to Revenue that it purchased a certain number of tax-compliant kegs.
It would only apply to draught alcohol products with a maximum ABV of 5%. The appropriate rebate is then credited to the VAT due in each VAT period of the following year, with a maximum of €20,000.
A 50-litre keg of Guinness contains 88 pints and generates €47.36 in excise per keg, meaning a 40% rebate would be €18.94 per keg. To receive the full rebate of €20k, a pub would need to sell 1,056 kegs annually or 20.3 kegs weekly.
It's understood that most rural pubs would not sell this volume of kegs. Bars outside the capital are far more likely to shut their doors. According to a study by the Drinks Industry Group of Ireland (DIGI), from 2005 to 2023, 2,054 pubs have closed down across the country. This is a reduction of 24%.
From 2021 to 2023, every one of the 26 counties saw the number of pubs in it decrease. However, Dublin is the least impacted county in the country, with a decrease of just 2.8% compared to 2005.
Around 114 pubs on average closed across the country every year in the 18 years up to 2019. This figure has risen to 144 a year in the period between 2019 and 2023, as the Covid-19 pandemic hit the industry hard.
Roscommon is the worst hit county when it comes to pub closures. It has 31.9% fewer boozers than it did 20 years ago. Cork has also been highly impacted, with 31.9% less pubs.
Economics Professor Tony Foley, who carried out the analysis, said: 'There is clearly a variation on closures between counties which broadly sees rural areas adversely impacted.
"The continuing decline is taking place against a backdrop of societal change and cost of business strains. Consumption of alcohol has notably decreased, how we socialise is changing, the types of drinks we consume are changing, particularly the rise of low-alcohol and alcohol-free products.'
As part of the report, a survey of 600 pubs and restaurants found that one in four had seen their business costs rise 20-30% in the two years previous.
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