Higher beer tax means Treasury loses out, say pubs

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Above-inflation rises in tax on alcohol have been blamed for a 3.9% decline in beer sales last year, the sixth annual drop in consumption according to British Beer and Pub Association figures.

Pubs recorded a 7.5% drop in beer sales, the biggest annual fall since 2008, but sales through supermarkets and off-licences increased by 0.6% as drinkers looked for ways to cut the cost of a pint.

The BBPA said rising tax levels and the fall in beer sales were causing the Government to lose tax revenues, as well as damaging communities through the closure of pubs.

BBPA chief executive Brigid Simmonds said: "Huge tax rises are having a big impact on beer sales. Beer has always been a rich revenue source for Government but they may now be cooking the golden goose.

"As beer duty has increased so dramatically over the last few years, the amount of beer produced and sold in Britain has fallen."

Alcohol duty has risen 26.1% since March 2008 when Labour introduced a "duty escalator" that saw the tax rate increase by 2% above retail prices index every year.

Two increases in VAT have also hit prices, with the rate going up from 15% to 20% in the past 13 months.

Pub beer sales have fallen by 20.2% over the past three years as the trade was hit by the recession, the smoking ban and increased taxes.

Beer sales have also declined as a result of pub closures, with up to 40 pubs a week shutting at the height of the downturn.

Simmonds said: "Beer and pubs are vital for the economy and pubs play a vital role in local communities. The Government should abandon plans for above-inflation hikes in beer tax in the Budget as further rises are simply unsustainable.

"This would create a win-win situation, with a boost for lower-strength, pub-based drinks like beer and more revenues for the Treasury."