UK: Alcohol duty up by 2%

UK: Despite major lobbying by the industry, alcohol duty will increase by 2% from midnight tonight. 

In what has been hailed the most difficult financial climate since the second world war, chancellor Alistair Darling has chosen to increase alcohol tax by 2% 

The British Beer and Pub Association has called the move a 'death warrant'.

BBPA spokesman Mark Hastings said: “Today’s Budget signs the death warrant for thousands of Britain’s pubs and for tens of thousands of British jobs.

“Pubs play a vital role in the economy and in local communities.  Yet six are closing every day and more than 2,000 have gone in the last 12 months alone.  The Chancellor’s unfair and unjustified announcement today condemns thousands more to shut for good.

“In imposing these additional beer taxes, the Government has wilfully ignored the views of the public, landlords, consumer groups, industry representatives and MPs from all parties who have been calling for action to save the British pub. 

“At a time when the rest of the economy is getting a supporting hand, the beer and pub industry is being singled out for punitive action.  Last year the Chancellor raised beer tax by an eye-watering 18 per cent.  Today's rise is a further body blow.  The result will be more pubs closing, more jobs being lost and more people consuming alcohol outside supervised, licensed premises.

“Our campaign with CAMRA to save pubs as a vital part of British life now becomes a matter of the highest priority.  It has widespread public support, cross-party political support plus the support of trade unions such as Unite.  The only person who doesn’t seem to be listening is the Chancellor.  We will be mobilising public, consumer, and industry support to force the Government to scrap the duty escalator as part of a co-ordinated plan to save the Great British pub.”

Mike Benner, CAMRA chief executive, said: “It is disappointing that the Chancellor has ignored widespread public concern about the plight of Britain’s pubs and decided to press ahead with an increase which will result in yet more valued community pubs closing down. Well-run community pubs are already struggling as a result of last year’s 18% increase in beer duty and the recession. This further beer duty increase will push more valued pubs over the edge resulting in job losses, reduced Government tax revenue and many more deprived of their favourite local pub.”

 “Well-run pubs provide an enjoyable and affordable night out in a safe and supervised environment and this duty increase will simply fuel irresponsible drinking of cheap discount alcohol in people’s homes, public parks and on the streets.”

The Wine and Spirit Trade Association has condemned today's announcement. The WSTA's chief executive Jeremy Beadles said: "Today's Budget set in train a 2% above inflation tax escalator on alcohol which, combined with last year's 17% leap in excise duty, will raise duty on alcohol by around 40% by the time of the London Olympics.

"The impact of today's announcement will be more severe than anticipated because the Treasury based its calculations on a notional zero inflation rate rather than the current forecast for inflation of minus 2.25%.

The WSTA will continue to seek an end to the four year tax escalator.

"At a time when the Government is offering other industries a helping hand it is extraordinary that it wishes to hurt the drinks industry with further tax increases.

"Thousands of jobs have already been lost in the industry and the decision to go ahead with a further tax increase puts thousands more at risk.  It's a bitter irony that with falling sales, these tax hikes are unlikely to deliver the revenues forecast by the Treasury." 

Gin and Vodka Association director Edwin Atkinson said: “The Government had announced a tax escalator for our industry of 2% above the rate of inflation (RPI). Now they have admitted that in actual fact, there is deflation. So they have changed the rules in order to apply a further tax increase to the drinks industry. Due to the price sensitivity of spirits, these tax hikes are unlikely to deliver the revenues originally forecast by the Treasury.”

Michael Turner, chairman of London brewer Fuller’s said: “59% of Darling’s fellow MPs opposed the plans to increase beer duty yet again along with 70% of the public opposing an above inflation increase. Beer duty rose by 18% last year alone and figures have shown that the Treasury’s revenues from duty over the last five years have actually decreased in that time.” 

Last moth five drinks trade bodies jointly urged the Chancellor abandon alcohol tax hikes.

Chairmen from British Beer and Pub Association, the Gin and Vodka Association, the National Association of Cider Makers, the Scotch Whisky Association and the Wine and Spirit Trade Association met with Chancellor Alistair Darling and the business secretary Lord Mandelson to discuss the impact of tax rises and the economic slowdown on the sector.

The drinks industry warned that 75,000 jobs are at risk if the Government proceeds with its current plan to further increase taxes on alcohol over the next four years. 

Research by Oxford Economics included in the industry’s Budget submission examined the effects of last year’s 17% leap in excise duty and the implications of the four year tax escalator which starts tonight. Forecasts include a further 75,000 jobs at risk in the drinks industry; a drop in alcohol sales by over 11%; consumer prices up 17%; tax revenue from alcohol £1.6 billion lower than original Treasury estimates.