Chancellor ignores calls to cut beer duty in Pre-Budget Report
Chancellor Alistair Darling's Pre-Budget Report (PBR) came as little comfort to hospitality operators, after he ignored calls for a cut in beer duty yesterday.
Pubcos had been campaigning for Darling to remove an 8% increase in beer duty when the VAT rate returns to 17.5% on 1 January. The increase came last year when VAT was cut to 15%.
But instead the Chancellor indicated that the extra duty will remain.
Commenting on the news, Liz Hall, head of research for hotels and leisure (H&L) at PricewaterhouseCoopers said: "Not responding to industry calls for the recently hiked alcohol duty to be cut, the PBR rather overlooks the H&L industry.
"However, a rise in VAT to more than 17.5% is yet another cost for the hotels, pubs and restaurants. Many of these operators, landlords and restaurateurs will have to absorb the 2.5% as they can't pass this increase to the customer whose spending is still prompted by heavily discounted and incentivised pricing."
Yesterday, the British Beer & Pub Association (BBPA) unveiled new research which it said showed that the government made five times as much money from the sale of beer through tax than the beer and pub companies.
BBPA chief executive Brigid Simmonds said: "We fully acknowledge that taxes on beer play an important role in the public finances, particularly at this difficult time. However, it is important they do not become unsustainable and restrain the ability of the sector to invest and grow.
"Government is in danger of slowly strangling the goose that lays this golden egg."
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By Neil Gerrard
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