Alcohol Tax Hike Puts Jobs At Risk In UK

by Robin Pilgrim, LawAndTax-News.com, London

02 March 2009

The UK drinks industry has warned that over 75,000 jobs will be at risk if the government proceeds with its current plan to increase taxes on alcohol over the next four years.

The drinks industry is urging the government to abandon the 2% over inflation tax escalator on alcohol - due to start in March - and pledge no further increases in excise duty in this year’s budget.

Research by Oxford Economics examines the effects of last year’s 17% leap in excise duty and the implications of the four year tax escalator scheduled to start this year.

Its 5 year impact study forecasts:

• A further 75,000 jobs at risk in the drinks industry;
• A drop in alcohol sales by over 11%;
• Consumer prices up 17%; and
• Tax revenue from alcohol GBP1.6bn (USD2.3bn) lower than original Treasury estimates

Findings from the study show that tax increases have compounded the difficulties for an industry already facing record pub closures and thousands of job cuts in a deteriorating economic climate.

Against this backdrop, the major drinks trade associations have agreed the joint submission - made on February 27 - to the Treasury ahead of an expected meeting with the Chancellor next month.

A spokesman for the five trade associations commented:

“We urge the government to reconsider before it is too late for thousands of wage earners and their families. Our industry is being hit just as hard as any other UK manufacturing and retail sector."

“We are not asking for a handout. We only ask the Chancellor to abandon further tax increases which will force more job losses.”

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