UK: Drinks trade voices disappointment over VAT increase
Published:  09 December, 2009

The Chancellor has today (December 9) confirmed that VAT will return to 17.5% on January 1 next year, having been reduced to 15% in November 2008.

The temporary reduction was accompanied by an increase in excise duty of 8% for wine and 4% for spirits, designed to ensure that the impact of the VAT change was broadly cost-neutral for alcohol.

The Chancellor confirmed today that these excise duty increases will remain in place despite widespread calls for them to be rescinded once VAT returns to 17.5%.

Responding to today's statement Jeremy Beadles, chief executive of the WSTA, said: "Today's confirmation that these tax increases will remain in place is disappointing for the trade and the millions of British consumers they serve, though sadly it is not surprising given the state of public finances.

"This means that since last year's Budget excise duty has gone up by around 20% for wine and 16% for spirits - excessive increases at a time when most families are feeling the pinch."

British Beer and Pub Association (BBPA) chief executive, Brigid Simmonds, said: “The VAT increase will put at least six pence on a pint of beer.  We also face a further two per cent above inflation beer tax rise in the Budget early next year.  Beer tax already accounts for around a third of the price of a pint and these increases will put yet more pressures on hard pressed pubs and consumers.

“The industry had to endure an 8 per cent increase in beer duty last December, which cancelled out the VAT cut enjoyed by every other sector. Since the Budget of 2008, our tax bill has gone up by £600 million during one of the deepest and longest recessions in living memory.  Taken together, this amounts to a stealth tax on brewers, pubs and their customers.  It is time for Government action to support the economic, community and social value of pubs.”

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