Beer tax cut could add £310m to economy

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New research: Beer tax cut could add £310m to the economy and create more than 7,600 jobs (Getty Images)

A cut in tax on beer sold in pubs could add £310m to the economy and create more than 7,600 jobs, new research has found.

The research, published by the Centre for Economic and Business Research (Cebr), found increasing Draught Relief to 50% could result in an additional 56.4m pints being sold in the on-trade.

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It estimated the move would create 7,663 additional full-time equivalent jobs across brewing and the on-trade and increase gross value added (GVA) by almost £310m.

Of the increase, £207m would come from the on-trade and £103m from brewing, according to Cebr.

Modest increase

The research also estimated an additional £119.5m in tax receipts across the supply chain, excluding any changes to excise duty.

Cebr added a more modest increase in Draught Relief to 30% would still generate 25.2m additional pints and create 3,403 jobs.

That scenario would increase GVA by £137.4m and generate almost £53m in additional tax receipts, excluding changes in excise duty.

Draught Relief currently stands at 13.9% and applies to beer sold in pubs through hand-pulls and keg taps.

The research followed the launch of the Drop the Tap Tax campaign last week.

Ahead of the upcoming autumn Budget on Wednesday 28 October, the campaign is calling on Chancellor John Healey to cut tax on beer as part of the fiscal address.

Huge boost

The campaign is being led by the Society of Independent Brewers and Associates (SIBA), which represents around 700 small and independent breweries.

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#DropTheTax campaign

SIBA calculated breweries currently pay around 40% of their turnover in tax and argued targeted changes to tax on draught beer could help rebalance the burden on the sector.

The association added lower tax would give community pubs and breweries in particular a boost by encouraging more beer sales and supporting employment.

Commenting on the figures, chief executive Andy Slee said: “Lower tax on pub beer improves the economy, creates jobs and means more pub pints are being poured.

“Pubs and breweries are a cherished part of our communities and a Drop in the Tap Tax could give them a huge boost in the Chancellor’s Budget.”