Report advises freeze on duty
A long-awaited report from Europe has recommended a complete freeze on UK beer duty.
The author of the report, European commissioner Fritz Bolkestein, concluded that the difference between states like the UK and France had led to widespread smuggling.
He recommended that states with high duty rates place a freeze on duty, while those with low duty rates should increase them in line with inflation until eventually harmonisation is achieved.
The commissioner's findings were released just days after figures from the Government revealed alcohol smuggling was still rife in the UK (See Smuggling costs £750m in lost duty (15 February 2002)for full details).
The trade is now hoping that the new report will encourage ministers to re-think their stance on duty.
Kent brewer Shepherd Neame has led the campaign for a duty cut, taking legal action against the Government in 1997 for failing to harmonise duty rates with the rest of Europe.
Vice chairman Stuart Neame (pictured) said: "Now the European Commission has confirmed everything we said in our court application.
"The Chancellor must understand that the three increases he has made to beer duty undermine the single market and should be reversed as soon as possible.
"The present absurdly high level of UK beer duty defies economic good sense, leads to smuggling on a huge scale, and makes us bad Europeans."
Earlier this month, the British Beer and Pub Association (BBPA) met Customs and Excise minister Paul Boateng to ask him to address the issue of bootlegging by cutting duty in the forthcoming Budget.
The trade claims even a small cut would slash profits for smugglers.
But Mr Boateng has said in the past that the Treasury does not believe high duty rates are to blame for smuggling and has stuck by a policy of increasing customs officers at ports and toughening up on penalties for offenders.
Rob Hayward, chief executive of the BBPA, said he hoped Mr Bolkestein's report would strengthen the trade's case for a duty cut.
He said: "The report affirms the strength of the case for reducing UK beer duty which we have been arguing for so long."
A report by Shepherd Neame last year found a duty cut could actually produce more revenue for the Treasury in increased VAT income as more people buy alcohol in the UK rather than travelling to France on so-called "booze cruises".
The next Budget is expected in April.
