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Licensed trade body telling stories about tax

The Association of Licensed Multiple Retailers claims that “The Treasury could be £217 million worse off this year” following increases in the rate of alcohol duty.

They base this claim on the fact that duty receipts for January 2009 (reflecting sales in December 2008; published by HMRC) were the lowest they have been for seven years. They quietly ignore the fact that receipts for December 2008 were the highest they have been for ten years. Not only are both of these provisional at present, but the HMRC figures for these two months come with a footnote explaining that, “Due to the effect of the holiday period, these figures are subject to greater uncertainty than usual.”

Another fact that is quietly ignored is that the increase in duty imposed at the beginning of December 2008 was intended only to offset the decrease in VAT. As IAS calculated at the time, for most drinks, the net result was a decrease in the total tax charged.

If the January receipts are supposed to reflect the effect of the increase in duty in December 2008, it would be informative to also look at duty receipts for May 2008, reflecting the first full month of sales after the tax increases in the 2008 budget. These are unremarkable, showing a 3% increase on the same month of the previous year.

ALMR’s prediction is part of an ongoing campaign by the drinks industry to put pressure on the government to abandon the tax escalator introduced in March 2008 (duty to increase by 2% above inflation each year until 2012).