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20-03-2023, 13:40
Visit The Pub Curmudgeon site (https://pubcurmudgeon.blogspot.com/2023/03/widening-gap.html)
https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHI8WLlGcSOfIqpkrWkvyFwPWcnu5cOcRbare2uItaKm d3J_Jt89RqOWzyzNpdfq_6Rsxu3eh2JXegvtXJeK4dHt0HYKog-r3GWD_teq2-zDjITOSvo0Eo7CXR0nIoJSGLKfCH2i3SAwtXAh3oeUJQityNrM xecqwO9LipqY8eNREB-tN0bk96nHya/s200/beer%20on%20draught.jpg (https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHI8WLlGcSOfIqpkrWkvyFwPWcnu5cOcRbare2uItaKm d3J_Jt89RqOWzyzNpdfq_6Rsxu3eh2JXegvtXJeK4dHt0HYKog-r3GWD_teq2-zDjITOSvo0Eo7CXR0nIoJSGLKfCH2i3SAwtXAh3oeUJQityNrM xecqwO9LipqY8eNREB-tN0bk96nHya/s640/beer%20on%20draught.jpg)
Last year, the government announced that, as part of the general restructuring of alcohol duties to come into effect from 1 August this year, they would introduce a 5% duty discount for draught beer. In his budget last week, Chancellor Jeremy Hunt sprung something of a surprise by almost doubling this discount. However, the way he achieved this was to freeze the duty on draught beer (and cider) but to increase it on all other alcoholic drinks by the full amount of RPI inflation, resulting in a differential of 9.2%. The full details of the new duty rates are set out on this page (https://www.gov.uk/government/publications/changes-to-alcohol-duty-rates/alcohol-duty-rate-changes).
In practice, this won’t make a huge difference to prices. The duty isn’t actually being cut, just frozen, so no prices will fall, they will simply rise more slowly. For a pint at 4% ABV, it’s worth about 5p when the VAT is added on, equating to 10p over the bar once a typical markup has been added on. That’s not enough to change people’s behaviour, but that isn’t the point. Essentially it is giving financial support to pubs by reducing the tax burden on a product that is only sold in pubs and other on-trade outlets.
Likewise, some have complained that most of the benefit will accrue to the brewers and drinkers of mass-market lagers, but of course most of the draught beer sold in pubs *is* mass-market lagers. I was amused, though, to see it labelled as the “Brexit pubs guarantee”, as it’s a change that could not have been made if we were still members of the EU, something that will no doubt stick in a few craws.
It wouldn’t really make much sense if it was intended to change behaviour. Fiddling about with tax rates rarely makes much difference to purchasing patterns, especially if it’s going against the grain of what people want to do. Halving the duty on beers of 2.8% or below didn’t lead to any kind of boom in sales. And, as I wrote here (https://pubcurmudgeon.blogspot.com/2016/08/mind-gap.html), would shaving a few pence off the purchase price of beer really prompt most people to drink more in pubs? I also tend to take the view that reducing the burden on things I happen to like, however tempting it may seem, isn’t usually a sound basis for taxation policy.
All the talk about the reduction in draught beer duty has to some extent obscured the fact that Jeremy Hunt has imposed the largest increase this century in the duty on all other forms of alcoholic drinks. This must account for 85% of all alcohol sold in this country, and includes all the production of small distilleries and a growing proportion of the sales of small independent breweries.
After several years of either duty freezes or minimal increases, this will be a real kick in the teeth for consumers, especially at a time when the price of pretty much everything else they buy in the shops is rocketing too. Tom Utley certainly wasn’t impressed (https://www.dailymail.co.uk/debate/article-11870353/TOM-UTLEY-Joyless-Jeremys-not-insulted-pint-hes-punishing-vices.html). And, as usual, smokers, who typically are less well-off than the average person, have been clobbered by an above-inflation increase.
The wine lobby are understandably aggrieved (https://www.morningadvertiser.co.uk/Article/2023/03/16/Spring-Budget-2023-duty-hike-blow-for-hospitality) that the changes will lead to the duty on a typical bottle increasing by as much as 45p, although in fact, while one might quibble about the ahsolute level of duty, a move to taxing wine by alcoholic strength rather than at a flat rate is long overdue.
More... (https://pubcurmudgeon.blogspot.com/2023/03/widening-gap.html)
https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHI8WLlGcSOfIqpkrWkvyFwPWcnu5cOcRbare2uItaKm d3J_Jt89RqOWzyzNpdfq_6Rsxu3eh2JXegvtXJeK4dHt0HYKog-r3GWD_teq2-zDjITOSvo0Eo7CXR0nIoJSGLKfCH2i3SAwtXAh3oeUJQityNrM xecqwO9LipqY8eNREB-tN0bk96nHya/s200/beer%20on%20draught.jpg (https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHI8WLlGcSOfIqpkrWkvyFwPWcnu5cOcRbare2uItaKm d3J_Jt89RqOWzyzNpdfq_6Rsxu3eh2JXegvtXJeK4dHt0HYKog-r3GWD_teq2-zDjITOSvo0Eo7CXR0nIoJSGLKfCH2i3SAwtXAh3oeUJQityNrM xecqwO9LipqY8eNREB-tN0bk96nHya/s640/beer%20on%20draught.jpg)
Last year, the government announced that, as part of the general restructuring of alcohol duties to come into effect from 1 August this year, they would introduce a 5% duty discount for draught beer. In his budget last week, Chancellor Jeremy Hunt sprung something of a surprise by almost doubling this discount. However, the way he achieved this was to freeze the duty on draught beer (and cider) but to increase it on all other alcoholic drinks by the full amount of RPI inflation, resulting in a differential of 9.2%. The full details of the new duty rates are set out on this page (https://www.gov.uk/government/publications/changes-to-alcohol-duty-rates/alcohol-duty-rate-changes).
In practice, this won’t make a huge difference to prices. The duty isn’t actually being cut, just frozen, so no prices will fall, they will simply rise more slowly. For a pint at 4% ABV, it’s worth about 5p when the VAT is added on, equating to 10p over the bar once a typical markup has been added on. That’s not enough to change people’s behaviour, but that isn’t the point. Essentially it is giving financial support to pubs by reducing the tax burden on a product that is only sold in pubs and other on-trade outlets.
Likewise, some have complained that most of the benefit will accrue to the brewers and drinkers of mass-market lagers, but of course most of the draught beer sold in pubs *is* mass-market lagers. I was amused, though, to see it labelled as the “Brexit pubs guarantee”, as it’s a change that could not have been made if we were still members of the EU, something that will no doubt stick in a few craws.
It wouldn’t really make much sense if it was intended to change behaviour. Fiddling about with tax rates rarely makes much difference to purchasing patterns, especially if it’s going against the grain of what people want to do. Halving the duty on beers of 2.8% or below didn’t lead to any kind of boom in sales. And, as I wrote here (https://pubcurmudgeon.blogspot.com/2016/08/mind-gap.html), would shaving a few pence off the purchase price of beer really prompt most people to drink more in pubs? I also tend to take the view that reducing the burden on things I happen to like, however tempting it may seem, isn’t usually a sound basis for taxation policy.
All the talk about the reduction in draught beer duty has to some extent obscured the fact that Jeremy Hunt has imposed the largest increase this century in the duty on all other forms of alcoholic drinks. This must account for 85% of all alcohol sold in this country, and includes all the production of small distilleries and a growing proportion of the sales of small independent breweries.
After several years of either duty freezes or minimal increases, this will be a real kick in the teeth for consumers, especially at a time when the price of pretty much everything else they buy in the shops is rocketing too. Tom Utley certainly wasn’t impressed (https://www.dailymail.co.uk/debate/article-11870353/TOM-UTLEY-Joyless-Jeremys-not-insulted-pint-hes-punishing-vices.html). And, as usual, smokers, who typically are less well-off than the average person, have been clobbered by an above-inflation increase.
The wine lobby are understandably aggrieved (https://www.morningadvertiser.co.uk/Article/2023/03/16/Spring-Budget-2023-duty-hike-blow-for-hospitality) that the changes will lead to the duty on a typical bottle increasing by as much as 45p, although in fact, while one might quibble about the ahsolute level of duty, a move to taxing wine by alcoholic strength rather than at a flat rate is long overdue.
More... (https://pubcurmudgeon.blogspot.com/2023/03/widening-gap.html)