VAT rise will hit beer drinkers - BBPA

VAT rise will hit beer drinkers - BBPA

The British Beer & Pub Association is lobbying for a cut in duty tax on beer to compensate for an expected rise in value added tax in the new UK Government's Budget.

Raising value added tax (VAT) to 20% from a current rate of 17.5% would cost drinkers an extra GBP300m (US$443m), the British Beer & Pub Association (BBPA) has warned.  

The VAT rise is expected to form part of the new UK Government's Budget, which will be published on 22 June and will focus on reducing the country's spending deficit.

The BBPA is lobbying ministers for a cut in duty tax on beer, which has risen by 25% in the last two years, to offset the anticipated rise in VAT.

Beer industry leaders view the Budget as a test of the Government's pre-election pledges to support community pubs, at a time when industry figures show that 40 pubs are closing down every week.

Cutting beer duty tax to compensate for a VAT increase "would be a very targeted way of supporting the pub", BBPA spokesperson Mark Hastings told just-drinks today (17 May).

"Half of the beer consumed is sold in pubs and, for the pubs themselves, 60% of the drinks they sell are beer," he said.

Should VAT remain at 17.5% following the Budget, the BBPA and other drinks trade bodies have called on ministers to scrap the previous Government's duty tax escalator on alcohol, which provides for a 2% above inflation rise on beer, wine and spirits annually for the next four years.
Any tax rises on beer will have to be passed on to consumers, according to the chief executive of Molson Coors UK, Mark Hunter.

"We make around GBP0.02 profit off every pint of beer that we sell, so we can't absorb it, whether we want to or not," Hunter told just-drinks at the launch of Molson Coors' Home Draught keg last week.

There has been speculation in the industry about whether the new Government will maintain a 'minister for pubs'. Earlier this year, the last administration added the pub portfolio to the Department of Communities and Local Government.

However, one of the frontrunners to take over the post, Liberal Democrat MP Greg Mulholland, said on his Twitter account today: "Seems clear there will be no minister for pubs."