CHANCELLOR George Osborne heaped even more pressure on Scotland’s pubs after increasing alcohol duty by 7.2% – or 4p a pint – in last week’s Budget.
The increase took effect at midnight on March 28 after Osborne confirmed the coalition was sticking with the duty escalator established by the previous government, under which tax on beer, wine and spirits goes up by 2% above the rate of inflation every year. The mechanism will remain in place until 2014. Pub owners must now decide whether to pass the increase on to drinkers to maintain profit margins – at a time when consumer confidence is fragile.
But with VAT having increased to 20% in January, and the major brewers serving notice of their annual price rises in the first two months of the year, many will simply be unable to absorb it.
The SLTA warned the ‘onslaught of crippling taxation’ would accelerate the trend of drinking at home, while the British Beer & Pub Association said the government had delivered a ‘hammer blow to pubs and pub-goers’.
“This will not raise any more money for the Treasury, cost ten thousand jobs this year alone and see many more pubs close,” said BBPA boss Brigid Simmonds.
Harry Hood, whose Lisini Pub Co runs four pubs across Glasgow and Lanarkshire, said publicans are being asked to pay 18p more for a pint than they were at the start of the year due to the various VAT, duty, and beer price increases. He said he would have to put the price of a pint up 25p to “get any sort of margin” – but fears such a move would be the “death knell” for business at a time when unemployment is growing and people are worried about money.
“One thing that amazes me is that every year the brewers put prices up by 5p, the government gets a penny more in VAT,” he said. “It’s a ‘double-dunt’ – they’re always getting an increase in VAT, so why do they need to put duty up?
“The supermarkets won’t pay it [duty increase] – they’ll tell the brewers to pay it. And what the government doesn’t realise is that every time a supermarket loss leads [on alcohol] it’s getting less VAT.”
Meanwhile, the promise of a penny off a litre of fuel duty, and the scrapping of the Budget fuel duty escalator, failed to cut the mustard with microbrewers.
