PUBS, Scottish whisky distilleries and West Country cider brewers will all benefit from alcohol tax changes announced yesterday, while the tobacco industry faces increasing duty on cigarettes.
The reforms announced in the Budget include a two per cent reduction on beer duty, amounting to a penny price drop in most pubs, for the second year running.
“For years consumers have been subjected to tax rise after tax rise and now this government has had the good sense to freeze cider duty and take another penny off the price of a pint,” said Heineken UK managing director David Forde.
Chancellor George Osborne remained committed to raising tax on tobacco by maintaining annual duty increases of two per cent above inflation, equivalent to 28p on the average pack of cigarettes.
Paul Stockall of the Tobacco Manufacturers’ Association said: “Today’s announcement to increase tobacco duties by two per cent above inflation and continue this duty escalator policy through the next parliament will do nothing to arrest the increase in illegal tobacco that is currently costing the UK government up to £7.9m per day in lost tax revenues.”
Critics described the changes as the government giving with one hand and taking with the other.
The Institute of Economic Affairs director of lifestyle economics Christopher Snowdon said: “Smokers would have to drink 55 pints of beer a day for the next seven years before they claw back the money Osborne has taken from them through the tobacco escalator.”
The penny saving on a pint of beer would require someone to drink 27 pints a day for more than a year before they had saved themselves £100 in tax.
Spirits and ordinary cider will see their tax frozen over the next year and wine will be removed from the annual duty escalator, saving five pence off a bottle of wine, a move cheered by brewers.
“In freeing the industry from a debilitating tax policy the government has given a show of support for these quality products. That will benefit the industry not just at home but also help us as we fly the flag for British business across the world,” said Diageo Great Britain country director Andrew Cowan.
For Scotch whisky the change is particularly relevant as the tax on an average bottle is nearing 80 per cent for the struggling industry.