BBPA issues warning over beer tax in Budget

By Michelle Perrett

- Last updated on GMT

Beer duty: BBPA fears increase in Budget
Beer duty: BBPA fears increase in Budget
The British Beer & Pub Association (BBPA) has issued a warning that the rocketing inflation rate should not be used to ratchet up beer taxes in the autumn Budget.

The trade association has warned that if the Chancellor sticks to his planned inflation-based increase the Government’s three, one-penny cuts in beer duty could be undone, in a single year.

It said that the Government is in danger of creating a ‘vicious circle’, with tax hikes fuelling further price inflation in the sector.

The plans are made worse by the Government’s use of the now “widely discredited” Retail Price Index (RPI) announced at 3.9 today, compared with the headline Consumer Price Index (CPI) of 2.9%. It said that the fact that beer has already had a “substantial” 3.9% tax rise in the March Budget, cost the sector £130m.

It said that with the inflation figure expected to worsen in October, the move, could put an extra 2p on a pint.

With price inflation running ahead of household incomes, the pub trade is particularly vulnerable to new and unnecessary cost pressures, and the Chancellor should not make a pint in the pub less affordable for pubgoers at the end of a hard-working week, the association says.

BBPA chief executive Brigid Simmonds said: “A second beer tax hike this year, based on inflation, would undo much of the good work done in tackling Britain’s sky-high rates of beer duty.

“Abolishing the hated, beer duty escalator saved many pubs and jobs, after years of unsustainable tax rises. With the challenge of Brexit, and a range of other cost pressures, the Chancellor should abandon plans for a beer duty increase in the Budget.”

Meanwhile, responding to the inflation rate, the Association of Licensed Multiple Retailers (ALMR) has called on the Government to bring forward its 2020 switch to CPI for business rates.

“Although the Office for National Statistics (ONS) has announced an increase in the rate of CPI to a one-year high of 2.9%, there is still a pressing need for the Government to apply this measure of inflation to business rates at the earliest opportunity,” warned ALMR chief executive Kate Nicholls. 

“The current system linking to Retail RPI, a measure discredited by the ONS itself, needs to be ditched at the earliest opportunity. RPI stands at 3.9% currently, and this could see eating and drinking-out businesses facing another massive increase in their business rates bills.”

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