Budget alcohol tax increases - ‘hammer blow’ to trade Move to discourage super strength lagers

In a move which produced an angry reaction from the beer and pub industry, the Chancellor retained the alcohol duties ‘escalator’ introduced by the previous Labour government, and increased alcohol duties in his Budget by 2 per cent above the rate of inflation.

This adds four pence to the price of a pint of beer, 15 pence to the price of a bottle of wine, and 54 pence to the price of a bottle of spirits. As previously announced, changes will also be introduced to beer duty.

Chief Executive of the British Beer and Pub Association, Brigid Simmonds, condemned the “failed policy” of the escalator, which she said was a “hammer blow”, adding “The fight to end this damaging policy continues.”

Finance Bill 2011 will also introduce a new additional duty on beers over 7.5 per cent alcohol by volume (abv) in strength at a rate of 25 per cent of general beer duty. A reduced rate equivalent to 50 per cent of general beer duty will be introduced for beers exceeding 1.2 per cent abv and not exceeding 2.8 per cent abv in strength. These changes will be effective from 1 October 2011.

The Government says that the purpose of these measures is to tackle problem drinking by encouraging industry to produce, and drinkers to consume, lower strength beer. The new high strength beer duty is intended to reduce the availability and affordability of ‘super strength’ lagers associated with problem drinking. The reduced rate for lower strength beer will help to give responsible drinkers a wider choice of products.

The previous 2010 Budget announced that the Government would review alcohol taxation to tackle problem drinking “without unfairly penalising responsible drinkers, pubs or local industry.” The findings of this review were announced on 30 November 2010 as part of a Government-wide package of measures to help tackle problem drinking. (See page 4)

The Government now seems fully to have accepted that alcohol taxes are relevant to public health. The Treasury Budget document says: ‘The Government is committed to fair excise duties on tobacco and alcohol which contribute to deficit reduction whilst supporting health objectives.’

However, the Government’s plan to tackle the problem of cheap alcohol from the supermarkets has been condemned as inadequate (see page 11).