Thursday, September 19, 2013

Exercise your frustration on Excise...

Following some interest in a Blog I wrote last May - Anyone Up for a Fight? - and given the upcoming Budget, I decided I’d have a rummage through the Department of Finance website to see if there was any more recent information.

My contention in the original Blog is that the Excise rates applied to Wine are unfair in relation to those levied on beer. And it’s not just my own personal opinion – the documents noted that “The EU Commission challenged Ireland some years ago about what it considered an unacceptably favourable treatment of beer (a largely domestic product) as opposed to wine (a largely imported product).” Indeed, the European Commission took a case to the ECJ against Sweden for exactly that in 2008, which although unsuccessful at the time, set a number of interesting precedents that I believe are now relevant in the way Ireland taxes wine relative to beer and spirits.

Much of the original material had come from documents produced internally by the Department’s own Tax Strategy Group (TSG). They produce briefing documents on various revenue collecting subjects, including Excise, and their reports are circulated in advance of each Budget.

However they are not released publicly until long after each Budget. So I discovered all the TSG documents for 2012 had suddenly appeared on their website just recently. And the one on Excise made very interesting reading…

Remember that all of these figures are PRIOR to last year’s budget in which Minister Noonan raised Excise Duty on wine by €1 a bottle including Vat, claiming that the increase, along with much smaller increases on beer (10 cents on a pint) and spirits would generate an additional €180 million.

So BEFORE he made those decisions in the Budget, he was told by his own Tax Strategy Group that:
  • If he simply brought Irish Excise rates for all alcohol products into line with those in Northern Ireland, there would be a total GAIN of €209 million to the Irish State. In the case of Wine and Beer, it would have meant an extra 20 cents on a pint and 41 cents on a bottle of wine. Guess which one lost out…
  • That the Excise rate for beer in Ireland was just over 100% higher than the EU average, and that Excise on wine was already a staggering 400% higher than the EU average.

Following his hikes, it’s now more like wine is 600% higher than the EU average.

You can read the full TSG document here – TSG General Excise Duties Budget 2012 - just remember this was all prior to last December’s budget.

Surely there is a case to be made, particularly since the last Budget, that wine (a largely imported product) is being taxed unfairly in relation to beer (a largely domestic product)?

1 comment:

  1. This is an excellent post and I have passed it on to the relevant government departments and budget commentators.