BBPA: cut beer tax to save pubs
The Government needs to cut beer tax when VAT returns to its normal level next year or face the prospect of more pubs closing.
That's the stark warning from the British Beer and Pub Association (BBPA) as it revealed that 4.3m fewer pints were drunk each day in pubs in the third quarter, compared to last year — a drop of 4.7%.
The BBPA said the Government had missed out on a staggering £174m in beer tax for the first nine months of 2009 — despite a 17% increase in duty on last year.
Total beer sales were down 0.8% for the quarter with the off-trade recording a 4.4% rise on last year.
The Chancellor added an additional 8% duty hike on beer in his Pre-Budget Report last year to off-set the 2.5% cut in VAT.
The BBPA now wants that 8% dropped when VAT returns to 17.5% in January. It believes the VAT rise could add a further 6p to a pub pint.
"These latest figures signal that overall beer sales are beginning to stabilise, but beer sales in pubs continue to decline, contributing to a pub closure rate of 52 per week," said BBPA chief executive Brigid Simmonds.
"This is a fragile situation, that could well be jeopardised by the wrong decisions on tax in the forthcoming Pre-Budget Report.
"Government should announce that when VAT goes back up in January, it will cut the 8% tax increase it put on beer in the Pre-Budget Report last year, which coincided with the VAT decrease.
"This would be revenue neutral for Government and a boost to beleaguered pubs.
"Beer sales are the backbone of Britain's pubs, which employ thousands, and act as the hub for many communities.
"We have already suffered beer tax increases totalling 20 per cent in the past two years — a tax increase of £600 million during a record recession. Further punitive tax increases could snuff out any recovery, with further job losses."
