Budget 2022: Food and drink group calls for a cut in excise rates to average EU levels

FDI said it surveyed its members in July to assess the extent and impact of input cost increases over the previous 12 months. Members saw increases in key costs such as energy, transport and materials.

The group called on the Government to use the €1bn Brexit Adjustment Reserve to help bankroll the measures it has called for.

“The food and drink sector is deeply resilient, but it now faces major disruption to its markets from Brexit while still contending with the impact of a global pandemic,” said FDI director Paul Kelly.

He said the trade and cooperation agreement between the EU and the UK has resulted in “significant additional costs” for food and drink companies “at each step of production and distribution”.

“In addition to Brexit-related transport and logistics cost hikes, Irish food and drink businesses are also experiencing inflationary pressures across most cost headings. This is due to a combination of macro external factors which include global and domestic supply-chain constraints and raw material inputs, as well as Brexit and Covid-19,” according to Mr Kelly.

Apart from calling for a cut to excise duty, FDI wants a new craft cider excise exemption scheme, and to allow alcohol excise on bad debts to be written off.

FDI said a cut to alcohol excise rates should be the “first stage” in a longer-term programme to bring Ireland’s rates into line with those in the rest of the EU and the UK.

“There should be a 15pc reduction in excise rates over the next two Budgets, with a 7.5pc reduction in each year – followed by additional reductions thereafter,” insists the group.

“These are modest and reasonable reductions on the long-term path to average EU excise levels,” it added.

“Very high excise levels – by EU standards – impact negatively on the national, regional and local economies, now and in the medium- to long-term.”

However, the call to cut excise rates comes as the Government prepares to introduce minimum alcohol unit pricing from January.

It aims to curtail alcohol consumption.

FDI said that the ongoing review of the Employment and Investment Incentive scheme should result in an amendment to enhance its supports for start-ups in the Irish whiskey and spirits sector.

The lobby group said that a State-backed export credit insurance scheme could be introduced.

Such a scheme would ensure what FDI said was a lack of private export credit insurance availability to cover all justifiable risks for exports “does not impact on the ability of Irish firms to export or remain competitive” against other EU rivals.

Separately, family businesses are planning to go on a hiring spree in the next year, but say they need more flexible tax treatment to reach their full potential in supporting a jobs-led recovery, according to the Family Business Network (FBN) annual sentiment report.

The report found that eight in 10 family-owned firms were expecting to take on more workers in the next 12 months, an increase over the 60pc who said the same thing last year.

The mood among family enterprises is generally buoyant, with six in 10 expressing optimism about the Irish economy, but taxation remains their top concern.

The FBN identified capital gains and capital acquisitions taxes as “key obstacles to growth”. Family businesses currently benefit from several tax reliefs on succession and inheritance, but the FBN argues that many families are forced to sell parts of their businesses to meet tax obligations, which limits growth.

“Family firms want to hire more people, invest and support both their local and national economies,” said executive director John McGrane.

“But this growth is contingent on a policy and economic environment which nurtures and supports home-grown family firms. With Ireland’s FDI friendly tax policies under pressure, Government will depend on family-owned businesses to scale-up and deliver Ireland's ambition of having 2.5m at work by 2024.”