'Unsustainable imbalance on beer profit'
The Government makes over five times more money from the sale of beer than brewers and pub companies, according to new research.
Oxford Economics conducted a study for the British Beer & Pub Association (BBPA) that compared the Government's tax take on beer with the profits made by brewing and pub sector sales.
The study showed that the total taxes, including excise, VAT employment and corporation taxes, raised by the Government from beer sales totals £7.2bn. The profits made by brewing and the pub sector amounted to just £1.4bn.
The total UK beer market generates £19bn. The Government takes 84% of the £8.6bn total tax and profit generated by beer sales.
MPs of all parties have expressed concern regarding the taxation on beer with 92 signing an Early Day Motion opposing Government plans for another tax increase in January, when VAT on beer is due to return to 17.5%.
The benefits of the 2.5% VAT cut enjoyed by other sectors since last year was cancelled out in the pub industry by an increase in beer tax.
"This analysis highlights a considerable and unsustainable imbalance in who makes what from sales of beer in Britain," said chief executive of BBPA Brigid Simmonds. "Government is extracting enormous value from the beer sector in tax, while the profit margins of the companies that make and sell beer are being squeezed wafer thin.
"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."
Recent polls show that the majority of the British public agree. Of those asked, 65% believed that beer taxes are too high, 74% thought any further increases in beer taxes would be unjustified and 61% believed the Government should use the Budget to help the sector.
The Chancellor is set to unveil his Pre-Budget Report today. The Morning Advertiser will bring you all the latest news as it happens.
