VAT hike could result in 7,000 job losses

By Matt Eley Matt

- Last updated on GMT

Related tags Job losses Cent Public house Tax

An increase in VAT to 20 per cent would add 6p to the price of a pint and result in 7,000 job losses, according to new research. The study by Oxford...

An increase in VAT to 20 per cent would add 6p to the price of a pint and result in 7,000 job losses, according to new research.

The study by Oxford Economics forms part of a Budget submission to the Chancellor from the British Beer & Pub Association (BBPA), CAMRA and the Society of Independent Brewers (SIBA).

It is widely expected that in his emergency Budget next Wednesday George Osborne will raise VAT from 17.5 per cent to 20 per cent. It has also been reported that alcohol duty could go up five per cent as the government attempts to deal with the financial crisis.

The joint-submission by the groups instead urges Osborne to freeze duty to support community pubs and to recognise beer's status as a lower-strength British produced beer.

However if VAT does go up to 20 per cent the groups want a 'compensatory cut' in duty of four per cent to ensure pubs are not taxed more, following successive duty hikes.

The study shows such a move would increase tax receipts to the Exchequer by £114m in the next year.

Brigid Simmonds, chief executive of the BBPA, said: "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.

"With dozens of community pubs closing each week in the UK such a move would have a devastating effect on local communities and on the beer and pub industry with more than 7,000 jobs being lost every year.

"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 Mike Benner added: "Tax on beer has rocketed by 26 per cent since the start of 2008 and enough is enough. We are therefore calling on the government to avoid hitting pubs with any further duty or VAT increase.

Julian Grocock, chief executive of SIBA, said: "Members of the new government have put on record their support for British pubs, British beer and responsible British drinkers. Now it is time for them to put their words into action and show how they are different from their predecessors."

The Oxford Economics report can be viewed on the BBPA website at www.beerandpub.com

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