Reduce beer duty and everyone wins

By Roger Protz

- Last updated on GMT

Related tags Beer duty Tax Great depression Alcoholic beverage Government

Protz: Gov must be reduced
Protz: Gov must be reduced
If British brewing is to recover from its worst crisis since the 1930s, the Government must take action soon, says Roger Protz.

An old song has been going round in my head: "You always hurt the one you love, the one you shouldn't hurt at all." It was prompted by the report from the British Beer & Pub Association (BBPA) on the slump in beer sales — down by 8.1% between July and September — and the heavy burden the brewing industry carries as a result of Government policies.

The Government, whatever its stripe, should pour love and succour on brewers. Beer-making is one of the last great British industries. Brewing and retailing give employment to close to one million people and all those jobs mean large income-tax receipts for the Exchequer.

Brewing alone accounts for £9bn a year in various forms of tax — mainly duty and VAT. That's a massive haul for the Government and you would think the Chancellor of the Exchequer would do everything in his power to bolster the interests of such a vital industry.

On the contrary — in this year's Budget, Chancellor Darling increased duty on beer. By the time beer reached the pump in the pub, a pint had gone up by around 20p. As a result, drinkers have been leaving pubs in droves. The number of pubs closing — now five a day — is accelerating. And as a result of the current economic problems, with all of us feeling the pinch, even beer sales in supermarkets have fallen.

As the BBPA says, this is the worst crisis for British brewing since the Great Depression of the 1930s. While Government rushes to the aid of distressed bankers and gives them billions in hand-outs, it just piles more misery on brewers and licensees.

The Irish Government reacted in a quite different manner. While Chancellor Darling was racking up duty on beer, his Irish opposite number froze beer duty, decreased it on low-alcohol beers and increased duty on wine. That is precisely what a sensible and sensitive Government should do — support your local industry when it's under pressure.

Ireland used to be the most heavily taxed beer-producing country in the European Union. As a result of this year's Budget decisions in Ireland and Britain, we may now hold the wooden spoon regarding duty. One thing is not in dispute: Britain is one of the most heavily taxed beer-producing countries, not only in the EU, but also in the world.

The figures are shocking: one-third of the price of a British pint goes in tax to the Government.

In mainland Europe, it is a very different story. In Spain, 4.5p of the price of a pint goes in tax. In France it amounts to 5.9p, and in Italy it

is 12.8p.

All the arguments advanced for making brewers pay so much in tax are false. Some years ago, Peter Lilley was my local MP and also a Government minister. I tackled him on the question of beer duty and suggested it should be cut in line with rates levied in Europe.

He looked at me as if I had just escaped from the loony bin.

"How on earth do you expect us to fund the NHS if we don't tax beer?" he asked. My reply — that the French and Germans run rather better health services than the British, while taxing alcohol lightly — was brushed aside.

But there is an alternative and rational argument for lowering beer duty. If duty were lowered, the Government would actually rake in more taxes. Cheaper beer would encourage people to return to the pub. There would be increased sales of beer, wine, spirits and food, all of which would mean a bigger tax haul for the Government in terms of duty and VAT.

And if British pubs were busy, more people would have to be employed and that would mean the Government would receive more income tax.

Of course, the counter argument is that if beer becomes cheaper it would lead to more binge drinking. But all the studies of binge drinking — now a declining problem in most parts of the country — show that those indulging in this stupid practice tend to drink alcopops and cheap spirits, rather than beer.

Education should go hand in hand with lower duty on beer. The merits of sensible drinking should be accompanied by a campaign to promote beer as our national drink — one that is both pleasurable and healthy when it is consumed in sensible amounts.

My advice to the Chancellor and the Prime Minister is simple: save British beer by lowering duty. Encourage people to drink beer. Keep tax high on alcopops and vodka and introduce a pricing policy for the supermarkets that will stop alcohol being sold at prices cheaper than water.

In short, support the wine of this country.

Related topics Beer

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