Pubs to pay 11p less tax on a pint than shop-bought beer
PUBS were promised yesterday that tax on pints would be kept lower than the duty paid on cans and bottles in supermarkets.
Amid sweeping changes to the way alcohol is taxed, the Chancellor said the levy charged on draught beer and cider would not rise in line with inflation in August.
Instead, a pub-pulled pint would have 11p less duty on it than shop-bought alcohol.
Jeremy Hunt confirmed the freeze was part of the ‘Brexit pubs guarantee’ which ensures ‘pubs will always pay less tax on a pint compared to supermarkets’, the Treasury explained on Twitter.
Under an EU Directive from 1992, varying duties on beer could only be applied on the basis of alcoholic strength, and not on where it is sold.
In his speech yesterday, the former Remainer, Mr Hunt, said: ‘I will do something that was not possible when we were in the EU and significantly increase the generosity of Draught Relief.’
He told MPs the change to beer tax would also apply to ‘every pub in Northern Ireland’ due to the Windsor Framework unveiled by Rishi Sunak more than two weeks ago, but yet to be passed by MPs.
He added: ‘British ale may be warm, but the duty on a pint is frozen.’ However, the separate ruling on draught beer was not enough to stave off criticism, especially to wider tax changes that will affect the cost of a bottle of wine and spirits.
A move to tax drinks according to its alcohol content – the stronger the beverage the higher the levy – means millions of drinkers face seeing the price of red and whites rise by 20 per cent.
This will add an average of 44p per bottle, according to the Wine and Spirits Trade Association – representing the largest rise in half a century in the tax on a bottle of red or white.
Also, across the board, tax on alcohol will rise with inflation – 10.1 per cent – on August 1.
Together, these measures were criticised as a ‘double-pronged tax raid’ on drinkers.
British Beer and Pub Association chief executive Emma McClarkin said: ‘The cut to draught duty as part of the alcohol duty reform is positive and we hope that it will result in a boost for our pubs this summer.
‘ However, the fact is our industry will be facing an overall tax hike, not a reduction, come August.’
Miles Beale, chief executive of the Wine and Spirit Trade Association, added: ‘The Government’s decision to punish wine businesses and consumers with a 10 per cent duty hike for spirits and a massive 20 per cent for wine, from 1 August, is staggering. It is the largest increase in wine duty since 1975.
‘This Budget directly contradicts what this Government claims it is trying to tackle. It will further fuel inflation. It will heap more misery on consumers.’
Nuno Teles, of Diageo, the makers of Johnnie Walker whisky, said the ‘decision is a hammer blow... We urge the Chancellor to reverse this punitive and inflationary tax hike’.