Duty to rise on beers above 7.5% ABV and fall on low-strength brews
The Government is to raise duty on beer of 7.5% ABV and above, while reducing it on low strength beers of 2.8% ABV and below.
The additional duty will come into effect from autumn 2011, although the Government will not reveal the extent of the increase until the next Budget.
The move was signalled in the Treasury's Review of Alcohol Taxation, published today, and prompted a mixed reaction from industry groups.
Mike Benner, chief executive of the Campaign for Real Ale (Camra) said: "News that tax will be increased on beers above 7.5% abv is disappointing. However we are pleased that this widely expected increase will be counterbalanced by a tax cut on low strength beers. Reduced tax on low strength beers is good news for pub goers at a time when 29 pubs are closing every week. This move will incentivise brewers to invest in producing new low strength real ales packed full of flavour."
And Kate Nicholls, head of communications for the Association if Licensed Multiple Rretailers (ALMR) argued that the move would not properly combat the sale of low cost alcohol in supermarkets.
"We have been arguing for some time that duty is a blunt instrument and is ineffective in regulating the price at which alcohol is sold. This review was a unique opportunity to address that and has failed to deliver on the Government's pledge to tackle irresponsible promotions and ban below cost selling," she said.
Meanwhile, Brigid Simmonds, chief executive of the British Beer & Pub Association said:
"We are pleased that the Government has decided to reduce duty for beer below 2.8 per cent. This will provide a welcome incentive for further investment in these beers, and encourage people to choose lower-strength drinks.
"There are also welcome signs that when it comes to beer and other lower-strength drinks, the Government recognises that moving towards duty based solely on alcohol content across all drinks would "significantly penalise responsible drinkers." It is also encouraging to see an explicit recognition that pubs are hit far more than supermarkets when it comes to duty increases.
"However, when it comes to the increase in duty on higher-strength beers, these account for less than half of one per cent of total alcohol sales, and less than one per cent of beer sales. Duty rates remain untouched for higher strength drinks such as spirits and wine.
"Overall, we need a duty system that nudges consumers to choose lower-strength, pub-based drinks such as beer. It would create a win-win situation - a more balanced system of alcohol taxation that would bring in more revenues, and create up to 30,000 jobs in the UK."
By Neil Gerrard
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