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Dublin, Ireland
Hi, I'm a Master of Wine (MW) having passed in 1997. I am about to open a wine shop in DĂșn Laoghaire, Ireland, called The Wine Library and this is my wine blog. There should be no conflict of interest between my work with The Wine Library and the opinions expressed herein but I will do my utmost to be fair and responsible in my posts – please read my Who Pays article. I have worked in wine education, retail, and consultancy. From June 2013 until May 2017 I was the Retail Manager for The Wicklow Wine Company. I was a member of the Council of the Institute of Masters of Wine (IMW) from 2008 to 2014 and was also a member of the Events, Trips and Governance Committees Having had problems with potentially libellous comments from unidentifiable posters, I now require that if you post a comment, you must identify yourself properly or it won't be published. Please note that I do not review products or services on request so kindly don't ask. I value my independence and I believe my readers (few that they may be) do so also.

Saturday, June 27, 2015

Exercised about Excise...

The June 2015 issue of Shelflife has an article which claims that "Irish wine consumers pay 624% more excise than their fellow Europeans". Now claims like this are always sensational, especially when used to back up a case - assuming, of course, that the figure is correct. Which it is, isn't it?
Well, no, it isn't. According to the EU the Excise Duty rates, expressed in € as of 1 January 2015, the figure is 550% if averaged across the 28 member states, or 255% if averaged across the 13 states which actually charge excise duty on wine. Now, the figure is used, I understand from the article, in NOffLA's pre-budget submission in which they suggest that the recent increases in excise duty could result in sunstantial closures in the off-trade, with consequent job losses. This is probably true as consumers tend to spend the same amount of money on a bottle, so a wine which once was popular may suddenly see a decline in sales solely due to Goverenment action.
However, I am loath to simply lecture the Government on an issue for the simple reason that Government officials are mainly interested in simple measures - increase excise, see no reduction in sales, why change? It always seems to me that the only way to achieve positive changes in the duty regime is to show a potential benefit to the Government. Furthermore, claims such as we pay 550% more excise than our EU neighbours pales when you consider that as we pay €0.70  duty per €100 of GDP, or only €2.50 duty per 10,000 of population (source: London Economics Report 2010) which, even if slightly out-of-date given the duty increases in 2012 and 2013, do not warrant major change on the part of the Government. Even worse, from a NOffLA point of view is the fact that excise duty corresponds to only 2% of total Government tax revenue (same source) and that we are 6th in the EU in that measure, behind Estonia, Lithuania, Poland, Latvia and Slovakia.
However, that same report considered a number of measure which might be taken at EU level and these (quite varied and complex) came up with some interesting outcomes. One of the most obvious is that excise duty should have a higher minimum rate - 15 EU countries have NO excise duty at all on wine! Bringing the minimum up across the EU would not affect us so much at home but might well make prices abroad more in line with ours. Another more useful measure would be a maximum level of duty - although they make no recommendation on what  that might be. But the best one is fairly simple and can be implemented here: reduce the duty on sparkling wines to the same as still wines.
The report suggests that this would have two effects - a 1% reduction in excise revenues but, crucially, a 15.6% reduction in the RRP of sparkling wines.
Although this is not really what NOffLA seeks it could be a very handy measure for both NOffLA and the Government. It would not hurt tax reveunes at all but would allow the Government to say "we've done something for retailers" and allows NOffLA to say "this is the start and is a real change". Both sides win.
Allied to minimum pricing this would result in a slightly better retail environment and, as the economy gradually improves, sales of fizz might also grow giving back to the Government that lost 1% in terms of duty on new sales. It seems to me that sometimes the best way forward is to find a samll battle which can be won rather than trying to effect wholescale changes. But that's me!

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