UK: Budget 2006 - The British Beer & Pub Association puts case for tax stability

The British Beer & Pub Association (BBPA) announced it met Treasury Minister John Healey on March 1 to present the industry's case for greater stability in taxation based on a freeze in beer duty.

John Dunsmore, Chairman of the BBPA and Chief Executive of Scottish & Newcastle UK, Ted Tuppen, Chief Executive of Enterprise Inns and Rob Hayward, Chief Executive of the BBPA are pressing the importance of stability due to the current economic pressures on the sector:

• Beer sales declined by 2.2 per cent in 2005
• 1000 jobs lost across the industry in the last 12 months
• Four large brewery closures during the year, and further consolidation amongst the family brewers
• Escalating costs, particularly energy prices.

At the same time, the industry team will identify the significant contribution made by the sector to the UK economy:

• UK brewers use 40 per cent of the nation's malting barley crop and sustain hop farming
• The sector supports over one million jobs
• The average pub spends over £75,000 in the local economy
• The industry creates over £25 billion of economic activity - 2 per cent of GDP
• Over 90 per cent of the beer consumed in the UK is produced in the UK.

The BBPA also highlights the environmental and social contribution of the sector:

• Brewers have reduced carbon emissions by 50 per cent since 1990 and water consumption is down over 25 per cent over the same period
• Over £55 million invested in energy saving equipment and processes since 1999
• A contribution of more than £4 million a year towards the UK’s recycling infrastructure
• £6 billion paid per year in beer duty and VAT
• Up to £60 million a year contributed by the brewing and pub sector to local community projects.

"The case for a beer duty freeze is very strong," said Rob Hayward. "Independent economic studies show beer duty is close to its revenue maximising level. This means every time Government puts up beer taxes there is a shortfall in revenue, because those tax increases have a greater impact on demand and sales than they realise. The stability of a tax freeze would improve the industry's prospects and increase Government tax receipts - it's a win- win.”

Also core to the BBPA's Budget case is a call for a review of the tax treatment of wine. Beer is taxed according to its strength. However, wine is taxed in broad bands. So although wine has been steadily increasing in strength, it has not paid any more tax as a result of this increase. The increasing strength of wine is irrefutable. As Wine Society News stated in February this year, "That wine has become more potent cannot be denied; over the past 25 years, the average strength has risen from 12% to nearly 14%." The research shows that as a consequence, over half of wine sales in the UK pay less duty, strength-for-strength, than beer - at a cost to the Treasury of over £200 million per year.

"It's time for the Government to stand up for beer," said Mr Hayward. "90 per cent of the beer consumed in Britain is made in Britain, while 99 per cent of the wine sold in the UK is imported. All we are asking for is a tax regime that does not discriminate against beer and in favour of wine. Correcting this flaw in the tax system would be good for beer and the British economy."

The British Beer and Pub Association is the UK’s leading organisation representing the brewing and pub sector. Its members account for 98% of the beer brewed in the UK and own nearly two thirds of Britain’s 59,000 pubs.

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .