Tax rises hurting British pubs

Photo / Bloomberg

The British brewing industry has blamed tumbling sales of beer in pubs on "huge" rises in taxes and urged the Government to abandon plans for further rises in this year's Budget.

Total beer sales fell by 3.9 per cent last year, driven by a 7.5 per cent plunge in pub beer sales, according to the British Beer & Pub Association.

The trade body said sales of beer in pubs had slumped by 20.2 per cent in the past three years, citing a 26.1 per cent rise in duty on beer since March 2008.

But the off-trade sector performed far better last year, with shop sales rising by 0.6 per cent, showing that the big supermarkets' discounting strategies are paying off.

The BBPA said that if beer volumes had been maintained throughout last year, an extra £257 million ($537 million) would have been funnelled into the British Government's coffers.

Brigid Simmonds, the BBPA's chief executive, said: "Beer has always been a rich revenue source for the Government - but they may now be cooking the golden goose. As beer duty has increased so dramatically over the last few years, the amount of beer produced and sold in Britain has fallen."

Labour lifted the beer duty by 5 per cent in the April 2010 Budget. The Government has vowed to maintain the controversial duty escalator that former Chancellor Alistair Darling, introduced in 2008.

This means beer duty will rise by 2 per cent above the projected retail prices index in September this year. The RPI was 4.8 per cent last month.

"The Government should abandon plans for above-inflation hikes in beer tax in the Budget, as further rises are simply unsustainable," Simmonds said.

Pubs are already reeling from the rise in VAT this month, which the BBPA said would add at least 6 per cent to the cost of a pint in pubs.

"The Government needs to pursue more pub-friendly tax policies. This would create a win-win situation with a boost for lower-strength, pub-based drinks like beer and more revenues for the Treasury," she said.

- INDEPENDENT