Chancellor raises duty on alcohol...again
Chancellor Alistair Darling has announced another increase in duty on alcohol and tobacco in order to off-set a 2.5% cut in VAT from 17.5% in his Pre-Budget report.
Darling said that VAT would be cut by 2.5% to 15% for a period of 13 months starting next Monday but the beleaguered pub industry will not benefit from the cut.
The Chancellor said he would raise duty further on alcohol in order to keep it at the same price despite the drop in VAT.
British Beer and Pub Association director of communications Mark Hastings said: "It's staggering that struggling pubs and brewers are denied the benefit of everyone else in the economy from the VAT cut."
The Chancellor is already deeply unpopular in the pub trade after increasing duty 9% at the last Budget with a promise of a 2% above inflation rise for the next four years.
Society of Independent Brewers (SIBA) chief executive Julian Grocock added: "It's entirely predictable. He instantaneously balanced the VAT cut by the increase in duty.
"He obviously thinks it's worthwhile to reduce VAT to stimulate the economy and help small businesses in every area except for fuel, tobacco and alcohol.
"Effectively he's taken nil action whatsoever for our benefit.
"All this trumpeting about doing something to help small businesses - why is the brewing industry not included? We're just as much in need of stimulus as everyone else. "
Campaign for Real Ale chief executive Mike Benner said: "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.
"The Government's failure to support pubs will undermine community life, ruin livelihoods and deprive people of an affordable night out at a local pub."
Association of Licensed Multiple Retailers chief executive Nick Bish added: "It is disgraceful — completely astonishing."
Earlier today, Shepherd Neame boss Jonathan Neame said the Chancellor would be guilty of "gross cultural vandalism" if he did not cut duty on beer in his Pre-Budget Report to help save community pubs.
The report predicts income from alcohol duty in 2008/2009 will be £0.3bn below Budget forecasts.
"Lower consumer spending could reduce alcohol receipts by £0.5 billion in 2009-10. However, there will be an offset from the decision to raise alcohol duty," the report predicts.
Other announcements:
• Empty property tax relief for building with a rateable value below £50,000 — benefiting 70% of properties.
• £1bn will be available under the Small Business Finance Scheme, with "fairer terms than before". Firms can apply to borrow between £1,000 and £1m.
• Delaying the increase in the rate of corporation tax for small companies - the level will remain unchanged in 2009.
