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IAS Budget 2018 analysis

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  • Alcohol duty was cut in real terms for the sixth year out of seven, with only wine duty increased in line with inflation
  • Accounting for inflation, beer duty is now 18% lower than in 2012; cider and spirits duty 10% lower, and wine duty 2% lower
  • Cumulatively, these policies will cost HM Treasury over £1.2 billion in 2018/19, and a total of £9.1 billion by 2024
  • The new band of duty on ‘mid-strength’ cider between 6.9% and 7.5% ABV announced in last year’s Budget was set at £50.71 per hectolitre and comes into force from February 2019, but is likely to have very limited effect on price and consumption
  • Lowering duty increases deaths and illness from alcohol – the best available estimates suggest these cuts have led to thousands of extra hospitalisations and hundreds more deaths
  • The evidence that duty cuts have benefitted pubs is dubious, as brewers have retained much of the savings and off-licenses have continued to undercut them
  • These measures are unlikely to have done much to support whisky exports as duty is only applied to domestic sales, and over 90% of scotch whisky is exported

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