FDBusiness.com

The VAT increase in Britain will push the price of a typical pub pint of beer beyond the three pound barrier for the first time, according to the British Beer & Pub Association, which has called for a halt to further rises in Beer Tax. BBPA chief executive Brigid Simmonds says the 2.5% VAT increase will put over six pence on the price of a pint, and comes on top of a 26% rise in Beer Tax endured in the past two years.

The BBPA points out that the duty and VAT ‘double whammy’ is placing shackles on the pub and hospitality sector at a time when it could be creating jobs, and leading the UK economy out of recession. Instead, the Government should abandon plans for further Beer Tax increases.

The VAT rise will hurt pubs, in which beer is the key seller, far more than other retailers, says the BBPA. As most are small, family-run businesses, they are far less able to absorb tax shocks than the big supermarkets. The move will further encourage drinking at home.

Further Beer Tax rises are in the pipeline. The Government is currently sticking to plans to increase beer duty above inflation in the Budget in March, through its tax ‘escalator’, even though the latest Oxford Economics research for the BBPA shows that rising taxes mean falling revenues and further job losses in the sector as beer sales fall sharply. Inevitably this means many more pub closures. The VAT increase alone is predicted by Oxford Economics to lead to the loss of around 8,800 jobs related to the sale of beer. These further planned duty increases will cost the Treasury £40m in reduced tax revenues, and lead to another 10,000 job losses.

The BBPA says the Government should also consider a lower rate of VAT in the hospitality trade, amidst growing evidence that similar moves across Europe are proving a winner when it comes to creating jobs and boosting tax revenues.