Mark Daniels: It's a taxing issue
Early in 2009 I wrote to Alistair Darling, then Chancellor of the Exchequer, and suggested that a good way to help the pub trade would, rather than simply beating us about the head with a big tax stick every March, be to apply a lower level of tax to cask/keg beer and a higher level of tax to packaged/bottled beers.
This, I still believe, would be an excellent way of the Government advocating that public houses are a safer, more responsible environment to enjoy a tipple or two in rather than the image certain tabloids like to paint of our industry, whilst simultaneously forcing an increase in off-trade prices to help, as they like to put it, tackle binge drinking.
Unfortunately, the reply I received was from one of his minions - I like to imagine that they look like those little yellow chaps in the film Despicable Me - and it might as well have simply said: "because we all failed our Maths GCSE we are unable to do this because we find it complicated."
What it actually said was that the economics of such a dual tax system would be unworkable. Or "no", in other words.
Similar ideas have been mooted on several occasions by others in the trade and all have met with resistance of one kind or another, but recently the arguments for different tax brackets have come forward once again and I hope they'll merit more attention than the previous government was prepared to give them.
Whilst the BII's suggestion that pubs should have a lower VAT rate than the off-trade seems to make more sense to me - similar, I suppose, to the way domestic heating oil has a different VAT rate to standard fuels - the Treasury have come up with their own, somewhat convoluted, suggestion to tackle 'binge drinking'.
Beers of lower than 2.8% volume will get a tax break, while beers over 7.5% will get a higher rate of duty. Which seems somewhat pointless: it serves to simply penalise brewers of the higher rate products, who will presumably simply brew beers with a lower alcohol volume to avoid the tax, while the most popular mainstream beers are above 2.8%, therefore negating any relief the lower duty might give.
Meanwhile, if I've understood the suggestion properly, beers between these two levels of volume will remain untouched. Which means that the cheap promotions we see on the television every day from supermarkets on household branded packaged beers will continue to be available.
This three-tier tax system will do little to combat binge drinking, won't hinder the supermarkets at all and few pubs will benefit. Most of all, it will simply serve to add more confusion to an industry already beleaguered by red tape. And be hideously complicated, and therefore costly, to administer.
It's good to see that this Government might be starting to think outside the box rather than simply ham-fistedly pushing through yet more tax increases but, like any good magic trick, the solution is often much more simple than people realise.
The majority of pubs are well-run, safe places for people to meet up and enjoy a drink in whilst off-trade alcohol is usually sold at an incredibly low cost that encourages people to drink in an uncontrolled environment. Despite this, it's almost always the public houses that take the blame - and the expense - for the irresponsible behaviour of those who haven't consumed alcohol in a licensed premises.
As such there should be two easily identifiable duty rates: a lower one for on-trade-only products such as draught cask and keg beer, and one for 'takeaway' beers.
With the impending VAT hike likely to do yet more damage to the pub trade and drive more individuals to the sanctuary of drinking cheap booze in their own home, such a solution seems obvious to me.
