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Drinks industry group calls for tax hikes to be reversed as pubs 'in crisis'

IRISH pubs are "in crisis" with alcohol sales in bars down by a third in the last five years alone, according to the Drinks Industry Group of Ireland (DIGI).

The organisation says sales fell by 6pc last year and 6,000 bar jobs have been lost since 2009. It is calling on the Government to reverse the taxes it applied on alcohol last year.

The industry was hit by a VAT hike and increased excise taxes in 2012. Excise duty on wine alone rose by 41pc, around €1 a bottle. DIGI is calling for Irish taxes to be brought in line with European averages.

It says Ireland has some of the highest alcohol taxes in Europe but that this has not stopped alcohol misuse, one of the Government's aims behind taxing drink. Countries like Italy and Spain apply far lower taxes but their populations have a better relationship with alcohol.

Dublin City University professor Anthony Foley says alcohol prices would have to increase "enormously" before abuse rates really fall, so the Government needs to look for other solutions. Pubs now sell only 40pc of all alcohol consumed in Ireland as consumers drink at home to save money. Prices in bars rose by nearly 2pc last year but fell by 1pc in off-licences.

The volume of sales outside of pubs, by off-licences and shops, rose by 3pc in 2012 but the overall figure still showed a decline.

Pubs and independent off-licences have to compete with supermarkets, who do not suffer as much from tax hikes on alcohol because they can rely on profits from a range of products. This helps supermarkets keep drink prices artificially low.

Publican Joe Hanway, of Byrne and Woods pub in Roundwood, County Wicklow, says you can buy alcohol from Tesco for the same cost he is charged by wholesale sellers.

His pub absorbed the recent excise hikes on alcohol rather than pass them on to customers, to make sure sales did not take a hit. Mr Hanway says most pubs cannot survive on drink sales alone and he introduced food a year-and-a-half ago.

DIGI expects another decline of 3 to 4pc in alcohol sales for 2013, when the impact of late 2012 excise taxes will have more of an effect. It says this decline would be decreased by at least 1pc if the excise hikes had not been introduced.

Irish Independent