As the budget approaches, the beer industry is bracing itself for yet another duty increase. Duty on beer increased by 26% between 2009 and 2010, and is due to carry on increasing. The Tories have committed themselves to sticking with Alastair Darling's policy of increasing duty on beer by 2% more than the rate of inflation. Which means that this year, just a couple of months after a 2.5% VAT increase, we look set for an increase of 5.7%.
Beer volumes are already in steep decline. The plight of pubs is exacerbated because supermarkets continue to absorb the increases and keep prices low - because they can afford to lose money on beer to get people into the store - while pubs can't afford to.
Analysts PriceWaterhouse Coopers have predicted that this relentless duty increases will actually result in the government receiving lower tax revenue overall, as the benefit for a higher tax per pint is more than outweighed by the resultant fall in demand the price rise creates.
And yet, incredibly, there are some ill-advised, hostile or just plain ignorant people out there who believe that, in the face of a watered down announcement about minimum pricing, tax on beer is too low.
If you hear anyone spouting such garbage, feel free to share with them a few stats the BBPA pulled together:
UK taxes (duty plus VAT) on beer already massively outstrip rates in any of our neighbouring countries. UK tax rates are EIGHT times higher than in France, TEN times higher than in Spain and ELEVEN times higher than in Germany.
The BBPA analysis also reveals the astonishing figure that Britain’s beer drinkers are paying FORTY per cent of the entire beer duty bill in the European Union – despite Britain’s small, 12 per cent share of the total population. UK beer drinkers are paying £3.1 billion out of an EU total of £7.7 billion in beer duty revenues.
In addition, some countries, such as Italy, Portugal, and Spain, have lower tax rates of tax for pubs, bars and restaurants - to help their hospitality industries and the hundreds of thousands of jobs that depend on them.
BBPA Chief Executive Brigid Simmonds, comments:
“When it comes to alcohol taxation, we need a debate based on facts, not myths. Our alcohol taxes are among the highest in the developed world, and for beer we have had huge, 26 per cent duty increases in the past two years. What we really need is a freeze in beer duty in the Budget.
“Our already high taxes show that duty-plus-VAT cannot be used as a proxy for a minimum price for alcohol. This would have a particularly devastating effect on pubs. When it comes to tacking alcohol misuse, what we need most is improved alcohol education and awareness, and tougher, targeted enforcement of the huge range of existing laws. Pubs need lower taxes - and less red tape.”