Saturday, 25 June 2011

Booze, bandits and bollocks - Booz in the Nooz special on the alcohol sales mystery

As Noam Chomsky has said, if you want to find out what big business is doing, listen to it talking to itself. The problem of drinking in Ireland is over, we keep hearing in the national press, because in a recession we aren’t buying so much of it anymore. Pub trade in particular is down and the recession is biting us all.


Cross border trafficing - the road from Newry to Dublin

Not true though, as IBEC Director Kathryn D’Arcy cheerfully announced in Drinks Industry Ireland on 23rd June. Instead there is actually ‘a modest recovery in the alcohol market recorded last year’. “That recovery, on foot of repatriated sales from Northern Ireland, showed an increase of just over five per cent in 2010,” Ms. D’Arcy stated. “However, this was only seen in increased wine and spirits sales in the off-trade. ” So there you have it. A change in the market share, about which there is much bleating and complaining from the losing teams, but overall plenty of drink still around and more besides.

What is interesting behind the stats is the fact that we still don’t have true figures on individual consumption. Independent assessors like Alcohol Action Ireland rely partly on published revenue receipts to give an idea of how much drink is sold, but two things undermine that as a reliable source of info on consumption. Firstly we don’t, as reported before on Gargle Nation, know what the supermarkets are selling because they are, amazingly, not required to tell us.  Secondly, Ireland has its own unique problems of accounting when it comes to two of its biggest problems - emigration and fraud.

Emigration
Eamon Gilmore tried to tell us last month that record numbers of passport applications (13 per cent higher than last year already, with 5,200 per day setting a new record in May) are a result of a boom in package holidays – a fact uncorroborated by the unhappy fall in profits of the few travel agents still operating in the country. Much more likely of course it is more evidence of the tragic massed emigration set to top 100,000 this year according to the cautious government advisory body the ESRC. And if even this conservative estimate is true, as Cormac O'Sullivan of the Economic and Social Research Institute (ESRI) signalled ‘it will be the worst haemorrhaging of the population in several decades’. It also means that those of us left behind are drinking above our weight , not just to toast absent friends but to drink their share and more besides to achieve that 5% increase in alcohol receipts while the population drastically declines.

Tax
If tax revenues are our source of information on the amount of alcohol entering our throats, tax expert Stephen Smith signals a major problem.   Writing in Economic Issues in Alcohol Taxation he tells us that in Ireland ‘alcoholic drinks are particularly heavily taxed, and alcohol taxes are a significant source of public revenues... This diversity of tax treatment creates problems of fiscally induced cross-border shopping and various forms of illegal tax evasion and fiscal fraud’.

Fiscally induced cross border shopping we know about. We are still travelling to the North for a cheaper fix of booze. So much so that, as Drinks Industry Ireland reports, ‘Sainsbury’s and Asda in NI are once again showing growth in the number of shoppers visiting from the Republic, claims Kantar Worldpanel whose figures for the 12 weeks to October 3rd (2010) indicate that the two NI multiples were responsible for taking 2.1 per cent of the total €9 billion RoI take-home grocery market in the quarter’. Just to do the sums, that is 189 million pounds worth of booze making its way across the border into the Republic last year, or 756,000,000 cans of Sainsbury’s lager, or about 250 cans for each adult.  Add to that the many similar ‘booze boat’ trips from Dublin to Liverpool and back each week, and it makes a significant addition to the pool of untaxed and unrecorded boozing this side of the border and the Irish Sea.

Fraud
And what of the ‘illegal tax evasion and fiscal fraud’?  It goes both ways as they say.  Alcohol manufactured abroad is good to sell in Ireland because the price is relatively high.  There have been efforts to identify this tax free trafficking such as Operation Flatmate reported in the House of Commons in July 2008. ‘As part of a joint operation with Republic of Ireland Customs, HMRC Criminal Investigation Officers visited storage premises South of Newry and discovered 2,000 bottles of wine. The wine was seized as it had been illegally diverted from a bonded warehouse and as such was not duty paid alcohol’. This investigation was apparently part of ‘an €1 million, EU-wide excise duty and VAT fraud investigation’.

Meanwhile, fraudulently selling abroad without paying high taxes is apparently attractive to some Irish alcohol manufacturers, who nevertheless remained nameless in a Drinks Industry bulletin in May. ‘Some 44,276 litres of alcohol were seized during 2010 in 287different raids worth a total of €600,000’ the bulletin reports, quoting the Revenue Commissioners annual report. In addition to 26 convictions for alcohol smuggling last year and six convictions in relation to counterfeit spirits, Revenue also identified ‘an alcohol diversion fraud relating to movements of duty-suspended alcohol from Ireland to Spain and Romania’.

The figures and names are not disclosed, but it's not three guys in a minivan by the sound of it, because they have hired lawyers and the case is stuck in the legal process like so many other fraud cases in Ireland. As the report concludes, ‘this assessment has been appealed and is currently in the appeals process’. Sadly, we’ve heard it all before.

Read more booz in the nooz here

No comments:

Post a Comment