Tax Hikes Jeopardize British Pub Culture

March 5, 2013 Taxation in UK

ye olde ship british pubLONDON – The UK stands to miss out on millions of pounds in tax revenues, and could see the loss of thousands of jobs, if the country goes ahead with the planned hike to beer taxes.

In a new report released on March 4th, the British Beer and Pub Association (BBPA) called on the UK government to freeze the rate of excise duty levied on beer, claiming that leaving the charge at the present rate would be beneficial to the economy of the UK and will raise the level of employment, without reducing the overall level of tax collections.

Under current regulations the taxation of beer falls under the scope of the duty escalator system, which sees the rate of tax on beer raised by 2 percent more than inflation every year.

Since the system was introduced in 2008, the duty on beer has risen by approximately 42 percent, and the scheduled hike for this year could increase the rate to as much 50 percent.

The BBPA claims that if the excise duty on beer is allowed to rise in 2013, numerous British pubs will be forced to close down, leading to a loss of nearly 5 000 jobs across the country, and causing reduction in overall tax collections of nearly GBP 5 million.

Further, the BBPA suggested that freezing the excise duties at the current level for another 2 years would protect nearly 10 000 jobs which would otherwise have been lost.

Summing up the findings of the analysis, the chief executive of the BBPA Brigid Simmond said “…far from hitting the bottom line, a duty freeze would raise revenues, protect thousands of jobs, allow us to create yet more jobs and help one of our greatest national assets – our network of much-loved British pubs”.

Currently the average pint of beer in a UK pub costs GBP 3.22, with approximately GBP 0.55 of the price being excise duty, and a further GBP 0.54 being VAT.

Photo by Joits