Sector chiefs meet Darling and Mandelson

The chairmen of the UK’s major drinks industry trade associations met with the Chancellor of the Exchequer Alistair Darling and Business Secretary Lord Mandelson yesterday (Monday, 16 March) to discuss the upcoming Budget and the impact of tax rises and the economic slowdown on the sector.

The meetings came just weeks after the drinks industry warned in its first ever joint Budget submission that over 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.

In the meetings, which were held separately, the industry urged the Chancellor and Lord Mandelson to abandon the 2% above-inflation tax escalator on alcohol which isdue to come into effect next month and called for no further increases in excise duty in this year’s Budget.

In asking for a duty freeze, industry leaders argued that it is essential now to help businesses across the whole sector cope with the most testing economic conditions.

The indusry’s budget submission included research by Oxford Economics examining 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 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%

• Tax revenue from alcohol £1.6 billion lower than original Treasury estimates

A spokesman for the five trade associations said: “We appreciate the opportunity to make our case directly to the Chancellor and Lord Mandelson and hope that they will take a close look at the potential impact on employment of any further tax increases.

”The Government has a real opportunity next month to reverse its planned tax increases on the drinks industry to protect jobs and Treasury revenue.”

© Alan Lodge 17.03.2009