The Public Liability Insurance Blog

Beer tax part 2: The bigger picture

There’s no dispute that running a pub is financially becoming more and more challenging and less rewarding. In our previous beer tax post, we talked to landlord David Gough of The Albany in Guildford for a view from within the industry, but today we’ll look at the bigger picture.

NagsA couple of weeks ago, parliament held a debate on whether or not to scrap its beer tax escalator strategy, which sees beer tax rise steadily each year and will continue to do so, above inflation, until 2014/2015. An e-petition asking for the debate reached 100,000 signatures showing that there have been widespread calls for this debate to happen. Several backbench politicians also supported the idea, bringing to the debate several stories of pubs in their constituencies that had previously been cornerstones of the community being forced out of business.

Since the introduction of the beer tax escalator in 2008, 5,800 pubs have gone out of business across the UK. This worries many as the pub is often used as a meeting place for many culturally important clubs and societies across the country ranging from cricket clubs to amateur dramatics societies. The increasing beer-tax is even proving a challenge to the mighty Wetherspoons behemoth, which in March announced it was being forced to slow down and that it was reducing the number of pubs it had planned to open over 2012 as a direct result of the tax hike.

Widespread pub closures will also have an impact on employment. Statistics published by the British Beer & Pub Association (BBPA) back in February show that almost 1 million British jobs depend on the health of the industry. Not only this, but of that number, 300,000 are young people directly employed by the sector.

OldIt was argued during the debate by Conservative MP Andrew Griffiths that the beer duty escalator actually brings less money into the treasury and not more. In contribution to the UK’s economy, the beer and pub industry brings in approximately £19.4bn and further harming that could have greater implications on the UK’s financial standing as a whole.

Closing the debate, the outcome was not necessarily bad news although no specific course of action was decided upon. Economic secretary Sajid Javid stated that the government would keep the beer tax escalator policy in place, but that it would commit to reviewing it and reporting before the next budget. Javid argued that if it were axed altogether, the treasury would need to find a further £35m a year, which would need to be levied either in additional taxes or through reduced spending.

Further statistics revealed that as it stands, British drinkers currently pay 40% of all European beer taxes whilst only drinking 13% of the beer in the entire continent. The beer tax escalator is set to conclude by 2014 or 2015, but the BBPA is continuing its campaign to bring this forward for the sake of the industry.

“In showing their support for a review of the duty escalator, which is urgently needed, MPs spoke up very strongly today to show the Government that this issue will just not go away,” said BBPA chief executive Brigid Simmonds. “I am confident that any review, which we hope the Government will announce, will show that above-inflation increases in beer tax do not make sense – they would bring in no additional revenue for the Treasury, but at the same time threaten pubs, employment, and our great British brewing and pub industry. Instead, we could be generating growth, creating jobs, and investing in a real UK success story.”

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