Alcohol duty to rise by 2%

Alcohol duty will rise 2% from midnight tonight after Chancellor Alistair Darling delivered another blow to the UK drinks trade in today’s Budget. 

Pleas from the industry for a duty freeze have been ignored, despite the ferocity and volume of support for the Axe the Tax campaign.

Concerns over the rate of pub closures and the potential loss of 75,000 jobs on top of the 44,000 that have been axed since 2005 have seemingly been brushed aside by the Chancellor, who said he made his 2009 Budget decisions guided by "fairness and opportunity."

Today’s Budget set in train a 2% above inflation tax escalator on alcohol which, combined with last year’s 17% leap in excise duty, will raise duty on alcohol by around 40% by the time of the 2012 London Olympics.

The British Beer and Pub Association (BBPA) warned that the duty hike will have catastrophic consequences not only in employment terms, but also in terms of the British way of life. 

“Today’s Budget signs the death warrant for thousands of Britain’s pubs and for tens of thousands of British jobs," said BBPA director of comunications Mark Hastings.

"Pubs play a vital role in the economy and in local communities. Yet six are closing every day and more than 2,000 have gone in the last 12 months alone. The Chancellor’s unfair and unjustified announcement today condemns thousands more to shut for good.

“In imposing these additional beer taxes, the government has wilfully ignored the views of the public, landlords, consumer groups, industry representatives and MPs from all parties who have been calling for action to save the British pub. 

“At a time when the rest of the economy is getting a supporting hand, the beer and pub industry is being singled out for punitive action.  Last year the Chancellor raised beer tax by an eye-watering 18 per cent. Today’s rise is a further body blow. The result will be more pubs closing, more jobs being lost and more people consuming alcohol outside supervised, licensed premises.

"Our campaign with CAMRA to save pubs as a vital part of British life now becomes a matter of the highest priority. It has widespread public support, cross-party political support plus the support of trade unions such as Unite. The only person who doesn’t seem to be listening is the Chancellor.

"We will be mobilising public, consumer, and industry support to force the Government to scrap the duty escalator as part of a co-ordinated plan to save the Great British pub.”

According to the Wine and Spirit Trade Association (WSTA), the impact of today’s announcement will be more severe than anticipated because the Treasury based its calculations on a notional zero inflation rate rather than the current forecast for inflation of minus 2.25%.

The WSTA said it will continue to seek an end to the four year tax escalator. Chief executive Jeremy Beadles said: "At a time when the government is offering other industries a helping hand it is extraordinary that it wishes to hurt the drinks industry with further tax increases.

"Thousands of jobs have already been lost in the industry and the decision to go ahead with a further tax increase puts thousands more at risk.

"It’s a bitter irony that with falling sales, these tax hikes are unlikely to deliver the revenues forecast by the Treasury."

Mike Benner, chief executive of the Campaign for Real Ale, said: "It is disappointing that the Chancellor has ignored widespread public concern about the plight of Britain’s pubs and decided to press ahead with an increase which will result in yet more valued community pubs closing down.

"Well-run community pubs are already struggling as a result of last year’s 18% increase in beer duty and the recession. This further beer duty increase will push more valued pubs over the edge resulting in job losses, reduced government tax revenue and many more deprived of their favourite local pub.”
 
“Well-run pubs provide an enjoyable and affordable night out in a safe and supervised environment and this duty increase will simply fuel irresponsible drinking of cheap discount alcohol in people’s homes, public parks and on the streets.”

The Gin and Vodka Association (GVA) also expressed its dismay at the announcement, warning that earlier Treasury revenue projections were no longer reliable.

Edwin Atkinson, director general of the GVA, said: “The government had announced a tax escalator for our industry of 2% above the rate of inflation (RPI). Now they have admitted that in actual fact, there is deflation. So they have changed the rules in order to apply a further tax increase to the drinks industry.

"Due to the price sensitivity of spirits, these tax hikes are unlikely to deliver the revenues originally forecast by the Treasury.” 

Alan Lodge, 22.04.2009