Opinion

'A duty cut would do nothing to help pubs'

By Gav Young, the Plough and Barleycorn, Isle of Wight

- Last updated on GMT

Operator comment: 'We have a new Government slogan of ‘levelling up’ and this should be the on-trade's rallying cry', says Gav Young (image: Getty/stocknshares)
Operator comment: 'We have a new Government slogan of ‘levelling up’ and this should be the on-trade's rallying cry', says Gav Young (image: Getty/stocknshares)

Related tags: Tax, Beer, Wine, Spirits, Legislation

It is no coincidence the biggest voices in the ‘cut the duty’ campaign are the big brewers. With duty at around 52p per pint it is a massive proportion of the value of a pint at the brewery gate, far more so than it is of a pint on the bar in the pub. Chanting about duty cuts is easy, well organised and, well frankly, rather lazy.

The truth is that a duty cut would do nothing to help pubs, absolutely nothing. If you remember the duty escalator then you will remember that annual brewery price rises were lower. If the duty doesn’t go up then the breweries annual price rise is larger, the net result is the same price rise to the publican.

Buying power

If the Government were to cut duty by 5p on the pint, then the brewers increase would rise by that 5p. The large off-sale businesses would have the buying power to demand that the cut was fed through to their prices while the average pub would see the cut lost in the annual ‘challenging year’ letter.

The duty cut would just mean that along with the traditional moans about the annual price rise, we could listen to ‘but they cut the duty’. Once again pub would be called out for their ‘greed’ as supermarkets cut sales prices and breweries gross margins grow.

Rallying cry

We have a new Government slogan of ‘levelling up’ and this should be the on-trade's rallying cry. Lets level up our industry, or at least move in that direction, we need to call for the off-trade to take a fairer share of the load. A higher rate of duty on off sales perhaps or an increase to the VAT rate for off-sales would earn the Government much needed funds while helping to level up the trade.

The on-trade collects far more VAT per pint than the big supermarkets (due to the necessary higher retail price) parity on that alone would be a strep towards a fairer playing field and far more beneficial to the trade than a duty cut that gets lost in translation.

Related topics: Property law

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