The British Beer & Pub Association (BBPA) 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, says the trade body.
The plans are made worse, it says, by the government’s use of the now widely discredited retail price index, announced at 3.9% today, compared with the headline consumer price index of 2.9%, and the fact that beer has already had a substantial 3.9% 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, says the BBPA, 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 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, says the BBPA, and the Chancellor should not make a pint in the pub less affordable for pub-goers at the end of a hard-working week.
The association’s chief executive, Brigid Simmonds, said: “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.”