Government warned that banning cheap alcohol will send shoppers north
The government is being warned that new laws banning the sale of cheap alcohol could reduce tax returns because people are heading to Northern Ireland to buy beer, spirits and wine.
The government has been advised that the introduction earlier this year of minimum unit pricing on alcohol could ultimately lead to less tax due to people shopping across the border.
A Department of Finance Tax Strategy Group paper on excise duty said it was too early to gauge the impact of the introduction of minimum unit pricing.
But it warned: “It is clear, however, its introduction has resulted in price differentials on alcohol products across the border which might lead to an increase in cross-border trade, undermining the tax take from alcohol sales.”
The guidance came among a range of options on tax and welfare for ministers to consider as they prepare for next month’s Budget.
This includes proposals to increase all welfare rates by €15 and introduce tax cuts for two million taxpayers.
The government is not bound by the recommendations but Irish Finance Minister Paschal Donohoe said consideration will be given to all the proposals outlined by his officials.
The paper on excise notes that the Drinks Industry Group Ireland (DIGI) and the National Off-Licence Association have called in their pre-budget submissions for a 7.5% reduction in alcohol excise in Budget 2023 with a further 7.5% reduction in 2024.
“It considers that this will help the drinks and hospitality sector to rebuild commercial activity in all areas of the country and to recover employment,” it said.
The document also notes that the Republic has the highest level of excise duty on wine in the EU and the second highest on beer and spirits.