The British Beer & Pub Association has issued a warning that today’s rocketing inflation rate should not be used to ratchet up beer taxes in the autumn Budget, as currently planned.
If the Chancellor sticks to an inflation-based increase already pencilled in, the benefits of the Government’s three, one penny cuts in beer duty could be undone, in a single year.
The plans are made worse by the Government’s use of the now widely discredited RPI index, announced at 3.9 today, compared with the headline CPI of 2.9 per cent, and the fact that beer has already had a substantial, 3.9 per cent tax rise in the March Budget, costing the sector £130 million.
With the inflation figure expected to worsen in October, the Government is in danger of creating a ‘vicious circle’, with tax hikes fuelling further price inflation in the sector.
The move, which could put an extra two pence on a pint, would be a big blow for beer drinkers and Britain’s much-loved pubs, where beer accounts for two thirds of all alcoholic drinks’ sales. With price inflation running ahead of household incomes, the pub trade is particularly vulnerable to new and unnecessary cost pressures, and the Chancellor should not make a pint in the pub less affordable for pubgoers at the end of a hard-working week, the association says.
BBPA Chief Executive, Brigid Simmonds, comments:
“A second beer tax hike this year, based on inflation, would undo much of the good work done in tackling Britain’s sky-high rates of beer duty.
“Abolishing the hated, beer duty escalator saved many pubs and jobs, after years of unsustainable tax rises. With the challenge of Brexit, and a range of other cost pressures, the Chancellor should abandon plans for a beer duty increase in the Budget.”