IRELAND’S world famous pub industry is under threat. More than 2,000 boozers have closed in the last 20 years.
Drinks Industry Group of Ireland research in 2023 warned the rate of closures is getting worse with hundreds shutting since the pandemic.
Family-run pubs are particularly struggling in rural Ireland.
Industry experts have blamed a range of reasons for the decline, including excise taxes, pint prices and staffing.
Today, the Vintners Federation of Ireland – led by President Michael O’Donovan and backed by Eamonn O’Rahilly, from from The Spotted Dog pub, Limerick City – will call for a 40 per cent rebate on the excise charged to draught products sold in pubs.
Writing in the Irish Sun, VFI CEO Pat Crotty VFI says the rebate would help protect rural pubs that play a vital social role in their local communities, while also preserving employment in a sector struggling with soaring costs.
Pubs are the beating heart of communities across Ireland.
They are places where stories are shared, friendships are made and local economies are sustained.
But they are also facing a crisis. Since 2005, the number of pubs outside Dublin has plummeted by over 2,000, a 26 per cent decline.
And this isn’t just about statistics, it’s about the loss of social spaces and the economic lifeline they provide to small towns and villages.
Pubs are facing an avalanche of rising costs, from wages and insurance premiums to the price of stock. But one of the biggest burdens is tax.
If you’re paying €6 for a pint, over €1.70 of that is going straight to the taxman. That’s because Ireland has the second-highest excise rate on alcohol in Europe. And it’s crushing our pubs.
TAX REBATE CALL
Publicans are not asking for a handout – we are asking for fairness. A 40 per cent rebate on the excise charged on draught products is a practical, targeted support that would make a real difference for small pubs across Ireland.
By targeting the rebate specifically at draught products in on-licence premises, we ensure that it supports pubs, not supermarkets or off-licences.
These are businesses at the heart of their communities, providing employment, social connection and play a key role in our tourism offering.
The excise rebate scheme is based on a report written by Anthony Foley from DCU Business School. The rebate proposal works as follows:
A public house provides evidence from suppliers that it purchased a certain number of tax- compliant kegs of qualifying beverage. The rebate of 40 per cent is calculated by Revenue, up to a maximum of €20k. The appropriate rebate is credited to the VAT due in each VAT period of the following year.
For example, a 50-litre keg of Guinness contains 88 pints and generates €47.36 in excise per keg. A 40 per cent rebate would be €18.94 per keg. To receive the full rebate of €20k, a public house would need to sell 1,056 kegs annually or 20.3 kegs weekly. Most rural pubs would not sell this volume of kegs.
The rebate applies only to draught alcohol products with a maximum ABV of 5 per cent. In effect, this means it is confined to beer/cider.
The restriction of the rebate to draught products ensures the measure is focussed on public houses and other bars.
EXISTENTIAL CRISIS
Rural pubs are facing an existential crisis.
We have seen hundreds of pubs close their doors in recent years. If this trend continues, we will lose a vital part of Irish culture and community life.
A draught rebate is a simple, fair, and targeted measure that would provide immediate relief. We estimate the rebate would cost €73million annually, a small fraction of the VAT proposal.
While the proposed VAT reduction for hospitality is welcome, it will only benefit pubs that serve food, leaving traditional pubs without support. The draught rebate, in contrast, would ensure that all pubs, regardless of size or location, benefit.
Critics may ask why pubs deserve support? The answer is simple, pubs are more than businesses – they are community hubs.
They employ local people, support suppliers and provide a place for social connection. In many rural areas, they are the last place for locals to gather.
People will also throw the ‘Temple Bar’ accusation at us. Fair enough, but this measure is designed to assist smaller pubs who are economically a million miles from Dublin city centre.
Also, we’re proposing capping the rebate at €20,000, so the bigger pubs won’t unduly benefit from the scheme.
If we don’t act now, the decline will only continue. We need the government to step up, recognise the value of our pubs and give them the support they deserve.
A 40 per cent excise rebate is a practical, targeted measure that could save a vital part of Irish life.
