Mixed reaction to Chancellor’s decision to cut duty on beer
The Chancellor’s decision to cut beer duty by 1p has been met with mixed reactions from those in the industry, with some arguing that it will provide the lift which the industry needs, while others have argued that the move doesn’t go far enough.
Michael Turner, chairman of London brewer and pub owner Fuller, Smith and Turner has argued that the beer duty freeze will be 'a boost for brewers' at a time when the industry has been hit hard by pub closures and rising duty rates.
According to the Campaign for Real Ale (Camra), beer duty has climbed by a staggering 42% since 2008, and 18 pubs a week have been forced to shut up shop.
Praising Mr Osborne’s decision, Camra argued that the cut to beer duty would boost the economy by as much as £5m in additional business, while approximately 5,000 pubs would be saved from closure.
Potential downside
However, because the government will forge ahead with planned duty rises for wine, spirits and cider, those in the alcohol industry have argued that the sector will continue to suffer the effects of above-inflation tax rises for the fifth consecutive year.
Miles Beale, chief executive of the Wine and Spirit Trade Association, said: "This is bad news for the UK wine and spirits sector, with year-on-year duty increases hitting consumers and businesses hard. It makes little sense to single out beer, particularly as there is a legal precedent to suggest the government is unable to do so. If this was designed as a measure to support pubs it seems misplaced: over 41% of drinks sold in pubs are wine and spirits, contributing £9.4bn per year."
While Camra argues that the beer duty cut has averted a potential 10p increase in the cost of a pint of beer, customers could see the cost of wine and spirits climb as a result of duty increases.
This would see a 10p increase in duty for a 750ml bottle of wine (to £2), and a 37p increase in duty for a 70cl bottle of vodka (up to £7.41).
If your business is struggling in the current climate, you may want to seek professional advice on company voluntary arrangements.