VAT rise in Budget could hit beer and pubs hard, say experts

15th June 2010, 10:40am

An increase of VAT to 20% could increase the price of beer by 6p a pint in pubs causing the loss of more than 7,000 jobs a year, according to independent research published today by beer and pub groups.

The report by Oxford Economics forms part of a budget submission to the Chancellor by the British Beer and Pub Association, the Campaign for Real Ale and the Society of Independent Brewers. This is the first time the three organisations, representing all parts of the sector – brewing, pubs and consumers – have joined forces in this way.

The submission calls on the Chancellor to freeze duty for a sustained period to support community pubs and to set out plans for a fairer tax system that recognises beer's status as a lower strength British-produced drink.

If, however, VAT is increased to 20% then the three associations call for a compensatory cut in duty rates of 4% to ensure that beer in pubs was not taxed more.  

Brigid Simmonds, chief executive of the British Beer & Pub Association, said: "With dozens of community pubs closing each week in the UK such a move would have a devastating effect on local communities and on the beer and pub industry with more than 7,000 jobs being lost every year.

"That's why we are calling on the Government to reduce duty in the event that VAT is increased to ensure that pubs are not unduly affected by the change.  In doing so, the Treasury would benefit from more than £100 million more into the coffers through additional tax receipts."

Mike Benner, chief executive of CAMRA, added: "These are difficult times for the public purse, but the Chancellor needs to support pubs to save jobs and ensure ordinary people can continue to afford to drink sociably in community pubs. Well run community pubs are essential to our society and should be not be subjected to excessive levels of taxation."

Julian Grocock, chief executive of SIBA, concluded: "This is a joined-up strategy from a beer and pub coalition for a sustainable industry that will pay its way in a reviving economy. Surely we can expect this administration to understand the power of coalition and co-operation."

The emergency budget is taking place on 22 June.

Related Articles:

• 22 Jun 2010 - Emergency Budget – Pub industry applauds decision to freeze beer tax
• 21 May 2010 - Pub beer sales drop by 8.8%, says BBPA
• 24 Mar 2010 - Pub industry reacts to yet another 'miserable' Budget

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