Drinkers face an unhappy New Year in 2010 thanks to the government who have at least two tax rises on alcohol in the pipeline.
The temporary reduction in VAT to 15% will be reversed on New Year’s Day. This will affect all VAT-able goods so expect your Christmas television viewing to be spoiled by even irritating ‘Sale starts at 9am on Boxing Day!’ advertisements than usual as the January sales are telescoped into the fag end of December.
Keen followers of this government’s extortionate approach to pubs and the brewing industry may remember that alcohol never benefited in the first place from the VAT cut as the Treasury immediately raised beer duty to compensate for the reduction in VAT. This hasn’t, of course, stopped the government including alcohol in the 2.5% increase planned for January 1st.
This administration’s schizophrenic attitude to the licensed trade has again been shown by the rather pathetic decision to delay in the increase in duty by a full six hours. The government’s seemingly favourite group of drinkers – those who binge 24 hours a day – will be able to drink themselves stupid right up to six in the morning on New Year’s Day at the lower rate of VAT.
Any delay in the onset of the tax is likely to be welcomed by pubs but if there’s any evening in the year when pubs don’t need help in generating custom it’s probably New Year’s Eve. This delay is likely to be welcomed most by Hogmanay revellers north of the border – a remarkable co-incidence that the Prime Minister and Chancellor are both Scotsmen isn’t it?
With the price of ale at or approaching £3 a pint in most pubs in the area a 2.5% rise in VAT is likely to translate to about 5p on a pint. Alcohol duty is also due to rise in April by another 2% and it’s possible that the pre-Budget report will increase that further.
Stuart MacFarlane, the head of mega-brewer AB InBev UK (makers of Budweiser, Stella Artois and Beck’s) predicted that alcohol prices would rise by 10% next year mainly due to ‘government meddling’.
In comments that many CAMRA members will endorse he said ‘The government’s thinking is not joined up? Are we policing underage drinking on the streets enough? No. It should better enforce laws already in place.’
CAMRA recently called on members to sign an on-line petition on the 10 Downing Street website to call on the Prime Minister to support responsible drinkers in the face of the neo-prohibitionist hysteria whipped up in the press.
In fact total alcohol consumption in the UK is actually falling. According to a report by wine magazine Decanter, the British Beer and Pub Association used the Treasury’s own figures to show that the rate of decrease is the fastest in over 60 years – with overall consumption down 8% in the first half of 2009. Such figures support CAMRA’s argument that problem drinkers are a small minority and targeted measures would be more effective than penalising the sensible majority.
However, the government’s eagerness to raise beer duty suggests that the arguments about restricting consumption by increasing prices across the board makes a very convenient cover for the Treasury. You might think it a very cynical ruse to soak beer drinkers yet again but I couldn’t possibly comment.