Thursday, October 10, 2013

Another open letter to Michael Noonan

Last year, after the shock of the budget, I penned a letter to Michael Noonan, you can read it here. I have to say I only wrote it to vent my frustration at the time and wasn't expecting to get any response from the Minister or from the Department of Finance.

I was right. Tumbleweed ensued....

However, as we look forward with bated breath to our 6th austerity budget, and with the restaurant sector doing a great job with their Keep Vat % campaign, I have grown increasingly annoyed at the lack of voice for the wine trade. Where are NOFFLA? There was a press release from the Irish Wine Association in the middle of August when all politicians are on holidays and the rest of the country weren't paying attention, but nothing else. So here goes again.

Dear Minister Noonan,

I'm sure you are busy right now putting the finishing touches to the budget, but I would like to write a short letter in defence of our humble wine trade.

As you know, you put the excise duty up on wine in last years budget by 81c + VAT, bringing the current level of excise on a bottle of wine up to €2.78 per bottle. This is way higher than the excise (per degree of alcohol) on beer in this country, the highest duty on wine in the EU and six times higher than the EU average. In the country we are supposed to try and emulate in every way, Germany, there is no duty on wine at all! What I'm saying is that, no matter which way you look at it, duty on wine in this country is way too high and certainly shouldn't go any higher.

In our trade - and I personally am only a tiny, tiny cog in the wheel - we are in the almost unique position of handing over more than 50% of our monthly turnover to the revenue commissioners in the form of duty and vat. So, our revenue bill each month is by far our biggest outlay every month and this has gone up by 40% as a result of last year's budget.  Most of us are hanging on by our finger nails and any further increase will surely destroy the independent trade and hand even further power to multinationals.

Jobs. Businesses going bust will lay people off. I don't need to explain that one.

Smuggling. I already have had numerous cases of restaurants telling me about people approaching them offering wine at €4 per bottle for COD and out of the back of a van. This wine is obviously not coming out of a bonded warehouse. Any further increase will see this activity take off like a rocket.

Below cost selling - will is still on offer for €4, €5. Do I need to do the maths? OK out of €5, there is €3.80 in tax so either they are getting the wine for free and magic pixies are packing it and transporting it or this wine is below cost and is being sold as a loss leader. Not only does this fly in the face of any semblance of responsible retailing of a dangerous substance, but the exchequer loses out with every bottle. It makes all sorts of sense to stop it. At the moment, you can buy a bottle of Heineken for 0.90c or a bottle of Volvic for 0.99c.

I really hope you can see sense to leave what is left of our trade alone and, if you need to tap the alcohol industry for money, try to be imaginative and find it from the only sector who can afford it - the supermarkets.

All the best and good luck next week.

Yours sincerely,

Gabriel Cooney
On the Grapevine