Tuesday, 15 October 2013

Drinking for your country

It's less than a year since excise duty on a litre of alcohol was hiked from €31.13 to €36.85. Now the Minister for Finance has done it again. From midnight tonight, it rises to €42.57/litre. What does it mean for a bottle of whiskey? Let's see the effect on a typical 700ml bottle of whiskey with an ABV of 40%. We'll include VAT (23%) because it's applied on top of the duty.
Yesterday
Tax = €36.85 x 0.7 x 0.4 x 1.23 = €12.69 
Tomorrow
Tax = €42.57 x 0.7 x 0.4 x 1.23 = €14.66
The typical bottle of spirits, then, will be €1.97 more expensive tomorrow than it was yesterday.

Looking at it from another perspective, if a bottle of whiskey costs €20, how much of that is VAT + excise duty?
VAT = €3.74
Duty = €11.91
Total = €15.65
In other words, 78% of the cost of a €20 bottle of whiskey is tax. Of course any profits that the manufacturer, distributor and retailer make on that bottle are also taxed. There is nothing fair or reasonable about this. It isn't social policy, it's the theft of hard-earned money from citizens and businesses to compensate for our politicians' inability to run an efficient state.

More and more over the last year I've been researching and writing about startups in Ireland's spirits sector. This government just kicked them in the teeth. Again. "Jobs budget", my ass.