Tax needn't be taxing - but its effects can be damaging

By Hamish Champ

- Last updated on GMT

Related tags: Inland revenue, Excise, Brewers

Tax, as the advertisements for the Inland Revenue say, needn't be taxing. Try telling that to Europe's - and the UK's - brewers. A new report by...

Tax, as the advertisements for the Inland Revenue say, needn't be taxing. Try telling that to Europe's - and the UK's - brewers.

A new report by PricewaterhouseCoopers - commissioned by Brewers of Europe, an umbrella body of beer producers founded in 1958 - paints a mixed, if somewhat predictable, picture for the future of brewing in the region. And pubs, when it comes to that.

In the document PwC said that excise duty rises "are usually more than passed-through into on-trade prices. This means that prices are increased by more than the amount of the tax rise". No surprises there, then.

PwC talks of the demand for beer being more sensitive to price, and that the same percentage increase leads to a higher fall in consumption in the on-trade than in the off-trade.

It highlights another brewer's bugbear, namely that every time a government whacks a few more pence on the price of a pint, a few more people decide enough is enough and don't spend their money on beer.

This way, the report and brewers agree, everyone loses; the government tax take, brewers and beer-loving consumers.

Another worrying aspect is the way duty hikes impact jobs. PwC says a 20 per cent rise in beer excise taxes across Europe could lead to the loss of more than 70,000 jobs in the region's on-trade.

Governments, including our own, will be weighing up some easy-get revenue versus the economic impact of such tax rises. One hopes they don't throw the beer and pub industries out with the bathwater.

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Enterprise Inns' regret at the death of Paul Lee should be taken at face value. Yet to say it is lamentable that it took his death for the company to get its safety house in order is a massive, massive, understatement.

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