NOffLA calls on Government to reduce excise duty and ban below invoice cost selling

(28 Nov 2017)

28th November 2017: The National Off-Licence Association (NOffLA) has called on the Joint Oireachtas Committee to recommend a reduction in the level of excise duty by 15%, to both insulate the independent off-licence sector from the economic implications of Brexit; and increase employment in the sector.

Responding to NOffLA’s annual members survey, 34% of members indicated that they would increase staffing levels were excise duty to be reduced; while a further 33% would increase the wages of existing staff. As such, NOffLA estimates that a reduction in excise duty could lead to the creation of 1,786 jobs throughout the country. 

Speaking at the Committee appearance, NOffLA spokesperson Jimmy Redmond highlighted that “Ireland’s excise regime both stifles employment levels and actively threatens border communities and the independent specialist off-licences operating within them. Excise duty requires immediate, up front funding from midnight on Budget Day, with the uncertainty surrounding its fluctuation from year to year preventing medium to long term business planning in terms of job creation”.

Not only are independent off-licences suffering from the impacts of punitively high excise duty rates, but NOffLA members are also currently operating within an unequal trading environment, due to the practice of below invoice cost selling – a tactic used by large internationally financed supermarkets, to under-shift alcohol in order to drive footfall and sell household products with a higher mark-up.

Highlighting the means through which supermarkets absorb tax increases, Jimmy Redmond noted that “according to research from the University of Sheffield, UK Supermarkets under-shift price rises on selected alcohol products in response to tax increases, accounting for as much as 68% of their total alcohol sales in some categories i.e. they absorb the increase of a tax to maintain the low prices on their cheapest alcohol for consumers”.

Mr Redmond continued adding that the practice of below invoice cost selling “is likely to impact negatively on tax policy effectiveness, because high-risk groups favour cheaper alcohol and under-shifting is likely to produce smaller consumption reductions”

NOffLA is therefore calling for a ban on below invoice cost selling, to rebalance the market place; positively impact public health initiatives; and save the exchequer some €24 million per annum, considering retailers are permitted to reclaim VAT on losses. 

Mr Redmond also reinforced NOffLA’s wholehearted support of the Public Health (Alcohol) Bill, noting that “As independent, responsible retailers of alcohol, NOffLA supports the Public Health (Alcohol) Bill as the first step toward ensuring that alcohol is treated like the controlled substance that it is.”

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