Irish excise taxes hurt responsible drinkers

Irish levels of taxation on alcohol beverages are, in comparison with European counterparts, at appallingly high levels. These are being carried by the Irish consumer, most notably by those who are responsible drinkers. Is the Irish policy on alcohol the correct one to tackle public health concerns? The Irish excise tax rate on wine is the highest in the EU: it’s far above that of the next in line, Finland and the UK, which tax wine at more than €300 per hectolitre. The Irish excise tax exceeds €600 per hectolitre.

This is even more apparent on sparkling wine, in which the Irish excise tax of more than €800 per hectolitre is more than twice the next-ranking UK rate of just above €400 per hectolitre. It is only on strong alcohol that Ireland doesn’t have the highest alcohol tax rates, ranking behind Finland and Sweden.

On top of this come the VAT levels on which, once again, the Republic is among the European champions, with a 23 per cent tax on sales.

If we add up VAT and excise, a third of every pint and glass of wine, and more than 60 per cent of a glass of whiskey ends up in the exchequer’s accounts. This more than exceeds the amount needed to fund prevention campaigns or patrols to crack down on drink-driving. It is a punitive tax on the consumer to deter alcohol. The evidence of the effectiveness of this policy has hardly been proven.

A 2013 review of 19 studies, carried out by the Department of Economics in Pennsylvania State University, only found two that showed a substantial reduction in drinking rates in response to alcohol price rises.

Consumer advocates have warned before that other measures, such as the implementation of minimum alcohol pricing in Scotland, will drive consumers to lower-quality brands.

Alcohol prices are economically inelastic and consumers will get creative to get around or find alternatives to their consumption. Those unintended consequences can often present the real dangers of well-intended tax increases. They know excessive alcohol consumption leads to health problems, which explains part of the reduction in consumption back to 1990s levels.

We need to recognise that consumers have the right to make choices. This implies that they make the choice to drink because they are allowed to enjoy themselves. Or at least while they are still allowed.

This article was first published by The Times.

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About Bill Wirtz

My name is Bill, I'm from Luxembourg and I write about the virtues of a free society. I favour individual and economic freedom and I believe in the capabilities people can develop when they have to take their own responsibilities.

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