Pubs warn of 5p extra on pint as they await beer tax raid in budget | Personal Finance | Finance
Britain’s pubs have hit out after suggestions the Chancellor plans to hike the duty on beer in her October Budget.
The British Beer & Pub Association (BBPA) says an increase in duty is “the last thing” the industry needs at a time when many community establishments are struggling for survival.
The organisation warned that a 5 percent increase in duty would add 2p to the price of a pint while a 10 percent rise would equate to an extra 5p.
The Chancellor has not ruled out putting up tax on beer, wine and spirits as part of efforts to plug what Labour claims is a £22 billion hole in the public finances.
It is understood that Treasury officials have produced papers showing that putting up duty on beer, wine and spirits could raise £800 million next year.
The BBPA is calling on the Government to use the upcoming Budget to cut beer duty, reform business rates, and pledge to keep the 75 percent business rates relief so that pubs and brewers can keep people in work and support more jobs.
Chief executive of the BBPA, Emma McClarkin, hit out saying: “Rachel Reeves’ plan to hike beer duty will be a bitter blow for our nation’s brewers, pubs and beer drinkers.
“After the Chancellor’s pre-election promise of a Five Point Plan for Pubs, it is impossible to see how this will be fulfilled if the price of a pint is increased by the Government.”
She added: “The cost of doing business has soared in recent years and, with potentially new punishing burdens, this tax increase is the last thing pubs and beer drinkers need. It makes it all the more vital that the Chancellor maintains the 75 percent business rates relief.
“Anything less will be a total betrayal of the great British pub that this government promised to protect, and the one million jobs that depend on them.”
The BBPA has calculated the potential impact of a rise based on current duty on a 4.5 percent ABV draught pint. It said the figure would rise from 49p to 51p with a 5 percent rise in duty and to 54p if duty went up 10 percent.
The organisation said if the publican were to absorb the increase, rather than passing it on to customers, this would bring down the average profit – after costs – for each pint sold to just 7p.
According to latest Oxford Economics and BBPA figures, Britain’s beer and pub sector poured more than £34.4 billion in Gross Value Added (GVA) into the economy and contributed more than £17.4 billion in tax in just one year.
The same research found that the beer and pub sector supports 1,040,000 jobs – an increase of more than 100,000 prior to Covid.
According to the latest Localis think tank report, eight out of 10 believe pubs bring people together, and three in four say their local battles loneliness in their community.
Miles Beale, the chief executive of the Wine and Spirits Trade Association (WSTA), said businesses were still reeling from the last increase in duties brought in by Rishi Sunak’s government.
He said: “Last year’s damaging reforms to the alcohol excise duty system, including the largest single duty hike in almost 50 years, have hit businesses, consumers and the Government purse.
“Prices have risen, sales are down and so is duty income by over £1.3 billion. Increasing duty – which is the Government’s inherited policy – will serve only to reduce income to the Government further at a time it can least afford it.”
The WSTA is urging the Chancellor to announce a two-year freeze in duties, which it said would “keep prices stable while optimising government income”.
