Call for tougher duty rates for the off-trade backed by health groups
THE Scottish Licensed Trade Association is calling on Westminster to reform the alcohol duty system in order to create a ‘differential’ between alcohol sold in the on and off-trades.
The proposition would see on-trade businesses able to claim a rebate on a percentage of the duty they pay, while duty in the off-trade would be increased to raise prices and make the scheme revenue-neutral.
Speaking to SLTN, SLTA spokesman Paul Waterson said the differential would provide “a much-needed boost” to pubs, bars and restaurants as they attempt to recover from the impact of the pandemic.
“We’ve obviously had the COVID problems and we need a kickstart,” said Waterson.
“I think also it will help with employment. I know that the [UK Government] wants wages to go up.
“There’s no slack in our businesses to pay any extra wages, with the prices we’re paying. So to give us a bit of flexibility to pay the staff the extra wages that we want to pay them, rather than putting prices up – because there’s a reaction to that from the consumer when you put prices up – this seems a natural way to do it.
“All in all, we believe it’s something the government should be looking at.”
Waterson referred to a 2019 report from the Social Market Foundation, a non-partisan think tank based in London. The paper on duty reform suggested – among other things – focusing alcohol taxation on the off-trade “where harms are most generated”.
It stated that, at that time, European law presented a barrier to the scheme.
But Waterson argued that, following Brexit, reform of the UK system is now a possibility.
“We’ve now got the flexibility to be able to do it,” he said.
“Our business rates are through the roof, our running costs are through the roof, and they’re going to go up.
“And we’re losing market share all the time, because our costs are astronomical and [the off-trade) are taking business away through pricing.
“The minimum unit pricing, in principle, is fine. We supported it. But this gives all concerned a lift.”
The idea has been backed by Alba MP Kenny MacAaskill, who has previously written to the Treasury in support of a duty differential.
He said: “The pub trade’s in trouble and needs help. They’re part of the fabric of our communities and provide for safe and supervised consumption of alcohol.
“Supermarkets have made fortunes over lockdown and off sale alcohol is often unsupervised and even sometimes unsafe. A differential duty rate would support our communities, as well as supporting appropriate consumption of alcohol.”
While health charities didn’t support any lowering of duty rates in the on-trade, they did back off-trade retailers paying higher duty than pubs, bars and restaurants.
Alison Douglas, chief executive of Alcohol Focus Scotland, said an increase in alcohol duty “would complement minimum unit pricing by further reducing the affordability of alcohol”.
“Alcohol sold in off-trade locations such as supermarkets and shops is associated with more harm than that sold in on-trade venues such as pubs and restaurants,” said Douglas.
“This is mainly because off-trade alcohol is much cheaper, and cheaper products are more likely to be consumed by heavier drinkers.
“Charging a higher level of duty for alcoholic drinks sold in the off-trade would allow the government to target tax increases where they would have the greatest effect without large tax increases for the hospitality sector.”
And Dr Alastair MacGhilchrist, chair of Scottish Health Action on Alcohol Problems, said it is
“SHAAP does not support a reduction in current on-trade duty rates, however, we believe that differential duty rates in the on and off-trade sectors as part of overall reform could give government a tool to better target fiscal interventions to reduce alcohol harm at the same time as raising revenue, particularly in the current market conditions and given the impact of ‘lockdowns’ on drinking habits – with at-risk drinkers appearing to have increased their consumption.”
A spokesman for the Scottish Government said the Treasury “must make responsible tax policy decisions that will support the sectors and businesses most impacted by COVID-19 through this challenging period, whilst also being mindful of the impact of COVID-19 on people’s drinking behaviours and alcohol harms”.
Chancellor Rishi Sunak will deliver the Autumn Budget on 27th October.