VAT hike: 7,000 jobs at risk
A VAT hike to 20% would raise the price of a pint by 6p and cause the loss of 7,000 jobs a year, without a compensatory cut in duty.
The report by Oxford Economics forms part of a budget submission to Chancellor George Osborne by three organisations — the British Beer and Pub Association (BBPA), the Campaign for Real Ale (CAMRA) and the Society of Independent Brewers (SIBA).
The submission calls on Osborne to freeze duty and set out plans for a fairer tax system that recognises beer as a lower-strength drink.
If VAT is increased to 20% at the Budget on 22 June, the three bodies call for a 4% compensatory drop in duty, which is 1.6p per pint.
Oxford Economics state that such a move would mean £114m to the Treasury in tax receipts next year and £134m in 2011/12.
The BBPA is encouraging pub goers to lobby the Chancellor through the I'm Backing the Pub website.
"This report shows that a decision to raise VAT would have a disproportionate effect on beer and pubs at the expense of the off-trade," said BBPA chief executive Brigid Simmonds.
"That's why we are calling on the Government to reduce duty in the event that VAT is increased to ensure that pubs are not unduly affected by the change."
CAMRA chief executive Mike Benner said: "These are difficult times for the public purse, but the Chancellor needs to support pubs to save jobs and ensure ordinary people can continue to afford to drink sociably in community pubs.
"Well run community pubs are essential to our society and should be not be subjected to excessive levels of taxation."
SIBA chief executive Julian Grocock called on the Government to stay true to its promises.
"Members of the new government have put on record their support for British pubs, British beer and responsible British drinkers," he said.
"Now it is time for them to put their words into action and show how they are different from their predecessor.
"This is a joined-up strategy from a beer and pub coalition for a sustainable industry that will pay its way in a reviving economy. Surely we can expect this administration to understand the power of coalition and co-operation."
