Budget slaps more duty on alcohol

Published: 22 April, 2009

Alcohol duties will climb by a further 2% from midnight tonight as a result of Chancellor Alistair Darling's second budget since the Labour government took power.

In a further blow to the drinks industry, the Chancellor told the House of Commons that 2% rises on alcohol an tobacco duty alongside fuel duty rises would raise over £6billion in Treasury revenue by 2012.

It is forecast that up to 75,000 people working within the drinks industry could lose their jobs as a result of the government's policy on alcohol duty.

Revealing the latest hikes, Chancellor Darling told MPS: "Taken together, these measures will raise over £6bn by 2012 - to secure Britain's economic future and to provide help for people now when they need it most."

Drinks trade leaders had been hoping for an abandonment of a 2% tax escalator on alcohol revealed by the Chancellor last November.

The 2009 Budget was swiftly condemned by the Wine and Spirit Trade Association (WSTA).

The trade body warned that Britain is now on track for duty on alcohol to reach 40% by the time of the London Olympics.

WSTA Chief Executive, Jeremy Beadles, said: "The news brings further misery to hard-pressed consumers and threatens more job losses in a sector already facing record numbers of business failures, pub closures and worsening trading conditions.

"Today's Budget set in train a 2% above inflation tax escalator on alcohol which, combined with last year's 17% leap in excise duty, will raise duty on alcohol by around 40% by the time of the London Olympics.

"In its first ever joint budget submission the major drinks industry trade associations warned a total of 75,000 jobs would be at risk if the plans to increase taxes further went ahead."

Beadles claimed that the impact of the Budget announcement would be severe for an industry already struggling under high rates of job losses.

"The impact of today's announcement will be more severe than anticipated because the Treasury based its calculations on a notional zero inflation rate rather than the current forecast for inflation of minus 2.25%."

Beadles added: "At a time when the Government is offering other industries a helping hand it is extraordinary that it wishes to hurt the drinks industry with further tax increases.

"Thousands of jobs have already been lost in the industry and the decision to go ahead with a further tax increase puts thousands more at risk. It's a bitter irony that with falling sales, these tax hikes are unlikely to deliver the revenues forecast by the Treasury."

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