The Chancellor gave drinkers a boost today by announcing that the planned tax increases on beer, wine and spirits would be canceled as part of a budget filled with £45bn in tax cuts.
The Treasury claimed the freeze would save £600m and is equivalent to 7p for a pint of beer, 4p for a pint of cider, 38p for a bottle of wine and £1.35 for a bottle of spirits.
Excise taxes on alcohol usually rise in line with the retail price index, which stands at 12 percent — the highest since the 1980s. But Kwasi Kwarteng said this increase will not happen in the coming year after he “listened to industry concerns”.
He will also expand the strain relief to cover smaller barrels of 20 liters and above to help small breweries – a move hailed by the Campaign for Real Ale.
Kwasi Kwarteng, said today: ‘Our drive to modernize also extends to alcohol taxes’
Mr Kwarteng said today: ‘Our drive to modernize extends to alcohol taxes as well. I have listened to industry concerns about ongoing reforms. I will therefore introduce an 18 month transitional measure for the wine tax.
“I will also expand the strain relief to smaller barrels of 20 liters and above, to help smaller breweries. And in this difficult time, we will not let the alcohol tax increase in line with the RPI.
“So I can announce that the planned increases in excise tax rates for beer, cider, wine and spirits are all canceled.”
The Society of Independent Brewers today welcomed the decision as “additional support to a struggling industry,” while the Campaign for Real Ale (CAMRA) called it “great news.”
Wetherspoon boss Tim Martin also called for a freeze on alcohol taxes, but warned Mr Kwarteng had not gone far enough.
He told MailOnline: ‘An alcohol stop is welcome but the real problem for pubs is that they pay much higher business rates per pint than supermarkets and furthermore pubs pay 20% VAT on food sales and supermarkets pay nothing.
“As long as this inequality continues, pubs will shrink and supermarkets will flourish.”
CAMRA chairman Nik Antona said: ‘The Chancellor’s announcement that the new excise tax rate on draft beer and cider will come into effect from August 2023 is fantastic news for the great UK local population as the tax system will recognize that beer, cider and perry in a pub or social club should be taxed at a lower rate than alcohol bought in supermarkets.
It is critical that this new lower tax rate on draft beer and cider now applies to 20 liter containers and over and bag in box products – and not to the larger 40 liter containers originally planned – meaning smaller breweries, cider producers and pubs all benefit.’
“This groundbreaking policy should help drive consumption to pubs, clubs and taprooms, encourage pubs and keep our beloved locals viable, alive and thriving.”
The tariff freeze was accompanied by the scrapping of the corporate tax hike planned for next year, so that the levy remains at 19 percent.
Meanwhile, pubs will also benefit from the energy aid scheme, reducing their gas and electricity bills.
But Sacha Lord, night economy adviser for Greater Manchester, was critical of the package.
‘No VAT or Biz Rate support for Hospitality. Corporate tax cuts are completely useless if companies don’t make a profit, or worse, close,” he said.
“These announcements now mean final orders for thousands of hospitality businesses, which means massive layoffs.
‘I am perfectly clear. This government is all about big corporations, corporations and the fat cats.
“They just sent a strong message to the hospitality industry: they don’t care. They just threw small family businesses to the wolves.’
The Treasury claimed the freeze would save £600m and would be equivalent to 7p on a pint of beer, 4p on a pint of cider, 38p on a bottle of wine and £1.35 on a bottle of spirits
Michael Kill, chief executive of the Night Time Industries Association (NTIA), said he was “extremely disappointed” by the chancellor’s announcement.
He added: “It will be seen as a missed opportunity to support companies that have been hardest hit during this crisis, leading to a lot of fear, anger and frustration in the industry as they once again feel that many in the will be cold.
“We have been very clear to the government that the energy bill reduction scheme, even with the announcement of the limited tax cuts on national insurance, corporate tax and excise duties, will probably not be enough to ensure that companies have the financial space to survive the winter, especially with yesterday’s announcement of the rise in Bank of England interest rates.”
He added: “I would urge the Chancellor and the Government to reconsider these measures, given the limited impact of the current tax cuts on the immediate crisis for many companies in the sector, the extremely vulnerable position in which the overnight economy and and to re-evaluate the inclusion of the general corporate rate reduction and the reduction in VAT in these measures.’