Beer Could Pull UK Out of Recession

March 16, 2011 Taxation in UK

Clover pintPub owners and brewers across the UK are calling for the government to ditch its plans of raising taxes on beer, warning that the extra levies will lead to job losses.

On March 14th the British Beer & Pub Association (BBPA) released the results of a new study on the number of UK taxpayers who rely on the brewing and pub industry for employment, and the potential effects of alcohol taxes on these jobs. The BBPA urged the government to reconsider its upcoming tax hike on beer, as it would have a vast negative impact on employment levels.

Under current UK legislation the rate of tax levied on beer must increase by 2 percent above inflation level every year, meaning that the upcoming rise will increase the tax by 7 percent. The UK Chancellor of the Exchequer George Osborne is expected to officially announce the increase next week in his national budget release. The BBPA is calling for the government to freeze the tax rate on beer and remove the mandatory yearly tax increases.

According to the BBPA, the currently excessive tax rate on beer is leading to an average of 6 pubs closing per day. It is estimated that the losses will lead to approximately 10 000 jobs being cut in 2012. The results of the study indicated that nearly 980 000 UK taxpayers currently rely on the brewing and pub industry for employment, earning approximately GBP 13.4 billion per year in wages. It is estimated that the sector accounts for approximately GBP 22.1 billion of the national economy.

At the release of the study the BBPA chief executive Brigid Simmonds said that a lowered tax rate on beer could help the brewing and pub industry create vast numbers of jobs, stimulate the economy, and be an integral part of “pulling the country out of recession”. She added that any revenue losses incurred by the government when ditching the tax rate increases on beer, would be compensated for by growing corporate tax revenues and National Insurance Contributions.

The BBPA is the UK’s largest beer and pub organization. BBPA memebers account for over 98 percent of all beer brewed in the country, and 54 000 national pubs.

Photo by Paul Watson