The depressing picture above is a taxi driver's view of a 3 mile tailback into Newry, taken a couple of years ago, the last time that duty on wine was increased. We all remember the daily traffic reports of traffic jams on the N1 as people flocked north to avail of cheap booze. Of course, while up there, they were buying groceries, clothes, TVs and aything else they could see.
The result of increasing excise duty was a net drop in the tax take. Not because people were drinking less, although consumption is dropping as well, but because they were buying in the North. And so, they put the duty back down the following year, the difference between the euro and sterling stabilised somewhat and people realised that the trip wasn't worth it.
Fine Gael are planning to put the duty on wine up by a euro per bottle by 2014. This does not result in an increase of €1 on the retail price. It is included in the bottom of the costing and thus any increase gets magnified by applying the usual formula for margin and VAT. In short a €1 increase in duty results in an increase of between €2 and €3 in retail price, depending on where you are starting from.
It would be catastrophic, not only for my business, but also for the whole restaurant and hospitality industry. Whatever hopes we have of increasing tourism could be forgotten about. At a time when we are desperately trying to offer value, cut costs and reduce prices as much as we can, this would be the straw that broke the camel’s back for many people in the wine trade.
So, if it goes ahead, it will:
- reduce the tax take for the government
- cost a huge number of jobs in retail and hospitality trade
- destroy tourism
- increase smuggling
- cause traffic jams for the lovely people of Newry
As you can see, I am not exactly in favour. The only hope is that they will be distracted by the next 100 billion we need for Anglo Irish or whatever other crisis awaits us!
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