Calls have been made for a 40 per cent excise rebate for all draught products sold in the on-trade to support rural pubs facing cost pressures. Ireland has the second-highest excise rate in Europe, meaning that 28 per cent of the price of a pint goes to the government in the form of tax (excise and VAT).
The Vinters Federation of Ireland (VFI) said that the current tax burden is unsustainable and is placing severe financial pressure on publicans, particularly in rural areas.
The organisation said that a rebate would help protect rural pubs that play a vital social role in their local communities, while also preserving employment in a sector struggling with soaring costs. More than 2,000 pubs have closed in Ireland since 2005, according to the Drinks Industry Group of Ireland (DIGI). This represents a 24 per cent decrease in licensed premises, with a decline particularly seen in rural areas.
“Publicans are not asking for a handout – we are asking for fairness,” said VFI CEO Pat Crotty. “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.”
“We welcome the Government’s commitment to support SMEs in the Programme for Government, which acknowledges the increased cost pressures on the hospitality sector. However, it is vital that any measures introduced benefit all pubs – not just those serving food,” says Crotty.
The VFI, while it welcomed a proposed VAT reduction for hospitality, said that this will only benefit pubs serving food, leaving traditional pubs without support. The draught rebate, however, would ensure all pubs benefit, regardless of size or location.
“Rural pubs are facing an existential crisis,” adds Crotty. “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 VFI is urging the Government to include the draught rebate in the upcoming Budget as a critical measure to preserve Ireland’s pub culture and sustain rural communities.
The VFI added: “The excise rebate scheme is based on a report written by Anthony Foley from DCU Business School. The rebate proposal works when a pub provides evidence from suppliers that it purchased a certain number of tax-compliant kegs of qualifying beverage. The rebate of 40% is calculated by Revenue, up to a maximum of €20k. The appropriate rebate is credited to the VAT due in each VAT period of the following year.
“For example, a 50-litre keg of Guinness contains 88 pints and generates €47.36 in excise per keg. A 40% rebate would be €18.94 per keg. To receive the full rebate of €20k, a public house would need to sell 1,056 kegs annually or 20.3 kegs weekly. Most rural pubs would not sell this volume of kegs. The annual excise rebate would be capped at €20k per licensed premises.
“The rebate applies only to draught alcohol products with a maximum ABV of 5%. In effect, this means it is confined to beer/cider. The restriction of the rebate to draught products ensures the measure is focused on public houses and other bars.”