Beer Tax Increase “Self Deafeating”

PintAs rumours of an increase in alcohol duty in the forthcoming budget grow, industry figures are urging the Chancellor to reconsider. Earlier this year the Campaign for Real Ale (CAMRA) said that 18 pubs a week were closing due to the combination of high beer duty increase business rates and VAT.

Should the Chancellor impose yet another increase in duty the cost of a pint of beer could increase by 4p, which could add an additional £125 million to the total amount consumers paid during the past year.

Kate Nicholls, Chief Executive of UKHospitality has expressed concerns that any rise in beer duty would deter people from drinking in pubs and buying alcohol from supermarkets. “Duty was among UKHospitality’s asks in our prebudget letter, pushing the Chancellor for a range of support that also includes reform of business rates, doubling the national insurance contribution threshold and a freeze in duty to support vital businesses. Significant duty increases make drinks in pubs and bars more expensive and would likely have the unintended consequence of people drinking cheaper of trade alcohol. Closing venues in which customers can drink responsibly in a supervised environment is not the way to combat problem drinking. The self-defeating policy would increase costs for the hospitality businesses when we are already seeing closures on the high street”

According to Britain’s Beer Alliance a industry body consisting of n120 members including industry giants ABInBev, Carlsberg, Heineken and Molson Coors, as well as many regional and independent breweries, across the UK, 3.2 pubs have closed on average every day over the last two years. If that trend continues, one in ten pubs nationwide could close within five years. It would mean a significant loss to the estimated £18 billion pub industry, which supports around 800,000 jobs.

A Britains Beer Alliance survey revealed that more than a third of people would reconsider a trip to the pub if beer prices increased. It also showed that a decrease in pubs could cause more than just financial loss, with 77% saying that they go to the pub as a place to relax and unwind, and two in five saying it acts a social hub. David Cunningham, programme director of Britain’s Beer Alliance, said: “Pubs are the heart and soul of our culture and communities, they support many jobs, contribute significantly to the economy and are dear to people’s hearts right across the country.

“Pubs already face a range of tax pressures and if the Chancellor raises beer duty in line with Retail Price Index inflation as planned on October 29, pubs will feel the pinch even more. Seven in every 10 alcoholic drinks sold in a pub is beer, so it’s easy to see how a small tax increase adds up over a year. “Based on current closure rates, we estimate that within five years more than one in 10 pubs in the UK will have closed for good, costing thousands of jobs. This will have a devastating effect on communities up and down the UK.”