The Government should slash Vat and excise on alcohol by around 60 cents a pint to help pubs survive, a publican leader will tell the Oireachtas tomorrow.
Never before has the pub sector needed the support of the Government as we do now,” Vintners Federation of Ireland chief executive Padraig Cribben says in his prepared remarks to the Special Committee on Covid-19 Response.
The VFI, which represents 4,000 pubs nationally, says more than three-quarters of pubs have annual sales below €390,000 even in good times. They will especially need State relief to strengthen their cash flow.
The VFI wants the new Dáil to splash pub costs through the end of the year by cutting Vat on alcoholic beverages from 23pc to 9pc, and by reducing excise by 15pc. It also wants rates holidays and the State pay subsidy to be extended until social distancing in pubs can end.
Such tax cuts, if approved, would remove around 60 cents in Vat and excise from every pint sold.
The most recent Beer Market Report by the Irish Brewers Association put the average price of a pint of lager at €4.94 and stout at €4.55.
This means the average Vat and excise added to a pint of lager stands at 86 cent and 55 cent respectively, or €1.41 total. Vat and excise would fall under the VFI’s proposals to 34 cent and 47 cent, or €0.81 per pint. The reduction in tax on stout would be a few cents less.
Reduced Vat, Mr Cribben says, “would generate immediate and tangible support to [pubs], allowing them to reopen viably and maintain jobs”.
He says a 15pc cut in excise still would leave Ireland with the third-highest rate in Europe, behind only Sweden and Finland.
Extending the payroll subsidy would allow pubs to avoid payroll costs that typically represent around 20pc of turnover in drinks-only pubs and more than 30pc in pubs with kitchens and restaurants.
Since March 12, Mr Cribben says, “turnover in the industry immediately dropped to zero”.
“Tens of thousands of people lost their jobs in the space of a single day. Livelihoods disappeared in an instant, some of which may never return. Pubs face a very uncertain future.”
He says pubs don’t expect to return to normal trading conditions “until such a time as a vaccine or treatment for Covid-19 has been found. Very few sectors of the economy will have been hit as hard. None will have their trade limited for so long.”
He rejects the view that reopening pubs would encourage reckless behaviour by customers who get drunk.
“As we have seen over the past 15 weeks, alcohol was certainly freely available,” he will tell the committee. “The result was many uncontrolled house parties and a massive surge in domestic violence reported to and by the gardaí.”
He says pubs, by contrast, provide “an antidote of sorts to that uncontrolled environment”.