The VAT increase will add six pence to the price of a pint of beer

9th December 2009, 2:43pm

VAT will return to 17.5% on January 1st next year, having been reduced to 15% in November 2008, Alistair Darling has announced.

In his final pre-Budget report, the Chancellor confirmed today that the excise increases of 8% for wine and 4% of spirits will remain in place despite widespread calls for them to be rescinded once VAT returns to 17.5%. This increase will also put at least six pence on a pint of beer. 

Jeremy Beadles, chief executive of the Wine and Spirit Trade Association, commented on the report: "Today's confirmation that these tax increases will remain in place is disappointing for the trade and the millions of British consumers they serve, though sadly it is not surprising given the state of public finances."

"This means that since last year's Budget excise duty has gone up by around 20% for wine and 16% for spirits - excessive increases at a time when most families are feeling the pinch."

Brigid Simmonds, chief executive of the British Beer & Pub Association also highlights some concerns: "The VAT increase will put at least six pence on a pint of beer.  We also face a further two per cent above inflation beer tax rise in the Budget early next year.  Beer tax already accounts for around a third of the price of a pint and these increases will put yet more pressures on hard pressed pubs and consumers.

"The industry had to endure an 8 per cent increase in beer duty last December, which cancelled out the VAT cut enjoyed by every other sector. Since the Budget of 2008, our tax bill has gone up by £600 million during one of the deepest and longest recessions in living memory.  Taken together, this amounts to a stealth tax on brewers, pubs and their customers.  It is time for Government action to support the economic, community and social value of pubs."

Related Articles:

• 29 Oct 2009 - Beer sales slide continues to slow
• 06 Mar 2009 - Closed pubs don't pay tax
• 10 Feb 2009 - VAT cut has not worked
• 28 Nov 2008 - One week to implement VAT changes is not enough

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