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Pubs Plead For Freeze On UK Beer Duty

by Jason Gorringe, Tax-News.com, London

10 February 2011


A freeze in beer duty and the scrapping of the previous government’s controversial beer duty escalator in the Budget are needed to restore growth in brewing, pubs, and the UK hospitality trade, and boost the wider economy, according to the British Beer and Pub Association’s (BBPA) Budget recent submission to the Treasury.

Scrapping the duty escalator in March would save over 10,000 jobs, mostly in Britain’s pubs, according to analysis by Oxford Economics. It would also generate an extra GBP40m in tax revenues for the government, stemming the tide in pub closures, still running at 29 per week.

The BBPA says that Britain’s huge hospitality sector, of which pubs are a key part, could be an engine for economic growth and new jobs, "if the government would only abandon the destructive tax policies of recent years." Instead, the current government plan, which could result in a 7% rise in beer tax via the ‘escalator’, could add over five pence to the price of a pub pint.

In its submission the BBPA says that beer has endured an increasingly heavy tax burden in relation to spirits in recent years and therefore beer duty should be reduced in relation to spirits to encourage the consumption of lower-strength drinks, as in Ireland.

It also calls for the threshold level of lower-rate taxes for beers to be raised from the current 2.8% abv, to drive growth in the lower-strength category and argues for lower VAT rates in the hospitality trade to drive economic growth.

Brigid Simmonds, BBPA Chief Executive, comments:

“The government needs to recognize the vital role that Britain’s beer and pub sector plays in the economy, and call time on further, punitive tax increases."

“As the beer escalator is predicated on 2% above inflation, we could see a rise of 7% in the tax on beer. When the duty escalator was first introduced inflation was considerably lower. Beer accounts for 60% of drinks sold in pubs, so fairer beer taxation is vital to their survival. On current policies, we are heading for the biggest single rise in beer tax in a year ever – something for which the government will surely not want to be remembered."

TAGS: tax | business | United Kingdom | excise duty | inflation

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