Job fears over increase in beer tax increase

The price of a pint will increase by more than 5p and thousands of jobs will be lost, campaigners said today after the Government confirmed rises in alcohol duty rates.

The Treasury said rates will increase by 2% above RPI inflation, so prices will rise by 5% from next week.

Camra said the announcement will lead to the price of a pint increasing by between 5p and 10p in pubs and means that beer duty has increased by more than 40% since 2008.

Chief executive Mike Benner said: "The fact Britons are forced to pay over 40% of the EU beer tax bill but consume only 13% of the beer sold in Europe is remarkable.

"British beer in a pub is so heavily hit with duty and VAT, the taxman's whirlwind hikes translate to him guzzling a third of every pint served, a shadow cast over the beer drinker depriving people of an affordable night down their local."

The British Beer and Pub Association warned that thousands of jobs will be lost this year and hundreds more pubs will close after the Government's decision to press ahead with the beer tax escalator.

Chief executive Brigid Simmonds said: "This is a huge lost opportunity to put British jobs and pubs first. Beer tax has now risen by 42% since the misguided escalator policy was introduced just four years ago. It means the loss of over 5,000 jobs this year, and hundreds of pub closures.

"Since 2004, the tax on beer has risen by 60%, but tax revenues have fallen far short, with only a 10% rise in duty revenues despite the huge toll in lost jobs and pubs, and lost revenue through VAT as beer sales have fallen by 25%.

"It beggars belief that further hikes are planned next year. The Government must rethink this damaging policy before even more harm is done to the British brewing and the pub trade."

The association said the average new price of a pint of lager will be £3.17, adding that beer tax was now 12 times higher than in Germany, with pubs having to pay £2,800 each in extra duty.

Tim Martin, chairman of the Wetherspoon pub chain said: "We are disappointed that excise duties on alcohol will increase by 2% beyond the rate of inflation, since the British people are now paying 40% of all the alcohol duties in Europe.

"We are also very disappointed that pubs will continue to pay 20% VAT on food when supermarkets pay nothing, enabling them to cross-subsidise their prices for alcoholic drinks."

Mark Hunter, chief executive of drinks giant Molson Coors, said: "There are no winners from the beer duty escalator.

"Ordinary British drinkers are paying more tax to drink less beer, reducing overall government tax revenues and forcing British brewing into a deeper, duty-fuelled decline.

"The escalator has lost all sense of proportion and logic. Beer drinkers in Britain already pay a whopping 40% of all European beer tax and yet drink only 13% of the beer, and we are disappointed that the Government has chosen not to end this crippling policy."

The 5% increase in duty penalises the Scotch whisky industry and consumers and undermines the growth agenda for the UK economy, the Scotch Whisky Association said, adding that the duty escalator rise of 42p a bottle means that only Finland and Sweden tax Scotch whisky more heavily within the EU.

Chief executive Gavin Hewitt said: "The reduction in corporation tax is a welcome boost to business but, by maintaining the duty escalator, the Chancellor has undermined the Government's objectives of encouraging economic growth and curbing inflation.

"The Government needs to review the duty escalator which is harming the Scotch whisky sector. The industry is vital to economic growth and supports about 35,000 jobs across the UK. It suffers at home due to the discriminatory tax regime applied by our own Government."

The association called for an overhaul of the duty regime through a move towards a system where all drinks were taxed at about the same rate, adding that Scotch whisky currently carries some 37% more duty per unit than beer and is 30% higher than wine.

The Wine and Spirit Trade Association warned that consumers face wine and spirit price rises as well because of the 5% increase in excise duty

The rate of alcohol taxation in the UK is now so out of step with our European neighbours that visitors to the London Olympics will face paying 50% more for an average bottle of wine (£4.89) than if the Games were being held in Paris (£3.26) and triple what they would pay in Madrid (£1.52), it was claimed.

Duty and VAT already accounts for three-quarters of the average price of a bottle of spirits and half the price of a bottle of wine, and the latest duty rise equates to 11p more on a 75cl bottle of wine and 41p more on a 70cl bottle of spirits, said the association.

Interim chief executive Gavin Partington said: "Today's Budget puts Britain on course for an Olympic record that gives no cause for celebration.

"Consumers and businesses are already paying the price for the excessive duty increases in recent years and today's news means more price rises are on the way.

"Whilst we recognise the pressure on the public finances, the mounting duty burden on the sector is holding it back from contributing fully to the UK's economic recovery."

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