Industry fury at alcohol tax hike in Pre-Budget Report

Industry leaders have reacted furiously after the Chancellor announced another increase in duty on alcohol in today’s Pre-Budget Report.

While VAT is to be cut by 2.5 percentage points to 15% for a period of 13 months starting next Monday, Alastair Darling said he would raise duty further on alcohol in order to keep it at the same price despite the drop in VAT.

The blow for the pub industry follows the 9% increase in beer duty announced in the last Budget with a promise of a 2% above inflation rise for the next four years.

Mark Hastings, director of communications at the British Beer & Pub Association, said the decision was “truly staggering”.

“With pubs closing at record rates and beer sales at their lowest since the Great Depression, this sector needs a fiscal stimulus just as much as the rest of the economy,” he said.

“There is genuine dismay and disbelief that the Chancellor is turning a deaf ear and a blind eye to the economic plight of Britain’s traditional beer and pub sector.”

The Campaign for Real Ale warned that the Chancellor’s refusal to allow beer drinkers to benefit from a VAT reduction means that 7,500 pubs could close by the end of 2012.

Darling also announced that £1b will be available under the Small Business Finance Scheme, with fairer terms than before

There will be a delay in the increase in the rate of corporation tax for small companies - the level will remain unchanged in 2009 – while an empty property tax relief for building with a rateable value below £50,000 — benefiting 70% of properties – will be introduced.

Bob Cotton, chief executive of the British Hospitality Association, said any decrease in tax was welcome but added that many of the schemes would have a negligible effect on hospitality.

He also warned that the potential 0.5% increase in National Insurance – slated for April 2011 – would hit the industry badly as it is a major employer. “Safe to say I am not jumping for joy,” Cotton said.

Neil Morgan, head of pubs and restaurants at property agent Christie & Co, welcomed the measures to help small businesses but warned that the Government has “missed a trick” by not giving a much needed helping hand to the licensed trade by charging extra duty on off-sales.

Industry issues demands for Pre-Budget Report >>

BHA calls for deferral of NI and VAT and return of capital allowances >>

Pub openings worth more to Treasury than closures, says ALMR >>

For the full report >>

By Daniel Thomas

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