Diageos views on tax have brewed up a storm

Diageo's views on tax have brewed up a storm

Diageo will hold clear-the-air talks with the British Beer & Pub Association in the latest example of drinks industry disagreement on Government alcohol policy.

Sources close to the situation have confirmed to just-drinks that Diageo and the British Beer & Pub Association (BBPA) will attempt to hammer out their differences today (12 November). Diageo could cease to be a BBPA Council member or even leave the trade body altogether due to a dispute over Government tax policy.

The UK Government is planning to reform the country's duty tax system for alcohol and the move has uncovered disagreement within the drinks sector on how to proceed.

Diageo said in August that the Government should reform the excise tax system so that all drinks are taxed by alcoholic unit and at the same rate. The Smirnoff, Johnnie Walker and Guinness owner said that this would mean a fairer playing field and could generate between GBP524m (US$808m) and GBP1.9bn per year extra for the Government.

Critics said that Diageo's plan would favour spirits and the group was criticised publicly by the UK CEO of Molson Coors, Mark Hunter, who is also the BBPA's vice chairman.

The BBPA has said that it wants the Government to "rebalance the tax system" by taxing drinks according to abv content, which would favour beer's relatively low-strength credentials.

However, Diageo's CEO, Paul Walsh, is chairman of the Scotch Whisky Association, which has shown itself more in-tune with Diageo's thinking on duty tax reform.