Cut taxes on price of a tipple and save jobs, says drinks trade

THE Government has been urged to slash the VAT rate on alcohol, to ensure thousands of jobs aren’t lost from pubs and restaurants around the country.

Drinks industry chiefs have called for a reduction in the rate, from 23% to 9%, as pubs reopened for the first time since March. The Licensed Vintners Association, the Vintners’ Federation of Ireland, the employers’ body Ibec and Drinks Ireland demanded urgent action from the Government, as restrictions mean the industry will continue to be affected in the coming months as it operates at a reduced capacity.

‘This unprecedented crisis has and will continue to have a devastating impact on Ireland’s drinks and hospitality industry,’ said Donall O’Keeffe, chief executive of the LVA. ‘Pubs have been severely impacted and will continue to be challenged, given the restrictions required, including social distancing and time limits on customer visits. Most will reopen over the course of the next number of weeks, but others will remain permanently closed. We have had to completely change our business model and the VAT model should change to reflect our new reality.

‘Government guidelines mean we will operate at 50% capacity or less, yet our VAT burden remains the same – this is inequitable and should change.’

In Spain and Italy, VAT on alcohol has

been set at the hospitality rate. In Cyprus the VAT rate has been reduced to 5% until next January, and it is also considering a lower VAT rate for the entire tourism sector – including pubs and restaurants – as part of its economic stimulus.

Mr O’Keeffe said: ‘Our VAT rate on alcohol is significantly higher than EU averages. It is our strong view that a temporary reduction and extension of the hospitality VAT rate to alcohol sales in the on-trade, until December 31, 2020, should be implemented. This will provide tangible support and show solidarity with this industry. This is about businesses surviving.’