UK: Alcohol duty tax to rise - Chancellor Budget Speech

22 April 2009 | Source: just-drinks.com editorial team

Duty tax on alcoholic drinks will rise by 2%, UK Chancellor Alistair Darling has announced in his Budget Speech, to the dismay of drinks trade bodies.

The above inflation rise, which will be effective from midnight tonight (22 April), comes despite near-unprecedented campaigning by the drinks industry for a freeze on tax.

Privately, however, several industry sources had expected the move. A Scotch Whisky Association source, who held meetings with ministers earlier this week, yesterday (21 April) told just-drinks that a 2% increase was likely.

The British Beer and Pub Association (BBPA) today accused Darling of "betraying" the UK pub sector, which is currently reporting around 39 pub closures per week.

"Today's Budget signs the death warrant for thousands of Britain's pubs and for tens of thousands of British jobs," the BBPA said.

The Wine & Spirit Trade Association also condemned the 2% tax rise. Chief executive Jeremy Beadles said: "Thousands of jobs have already been lost in the industry and the decision to go ahead with a further tax increase puts thousands more at risk.  It's a bitter irony that with falling sales, these tax hikes are unlikely to deliver the revenues forecast by the Treasury."

The tax rise sees the Government sticking to its projected "tax escalator" on alcohol, which lays out 2% above inflation rises for the next four years. Last year, duty tax in wine, beer and cider rose by 18%.

The Scotch Whisky Association added its voice to the chorus of disappointment across the drinks sector at today's announcement.

It said that the rise represents a 5% tax increase in real terms, because Darling also predicted that the retail price index would fall to -3% by September this year.

David Cameron, leader of the Conservative Party, the main opposition party, said: "Look at the tax on beer. That's going to hit every drinker in every pub."

The Chancellor's move on alcohol tax comes as the Government looks to plug a deepening hole in public finances, due to extra spending designed to reinvigorate the economy.

Darling said that he expects gross domestic product to return to growth in 2010, to 1.25%. This will rise to above 3% in 2011, he said, amid scepticism from the Opposition benches.