Budget 2021: Sunak announces changes to alcohol duties
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Giving his verdict on the Budget Mr Martin told Express.co.uk: “Business rates relief is capped at £110,000 versus our annual bill of £60m- so very small. It will have an effect on small pub companies, not much for us. We pay approximately £175m per annum for excise/alcohol duty, and it may take 2p off a pint from February 2023, unless there are further rises between then and now”.
Speaking in the Commons earlier today the Chancellor described the UK’s alcohol duty system as “outdated, complex and full of historical anomalies” before going on to explain a major plan of reform.
Under the new measures, the number of bands duty rates are applied to will be reduced from 15 to six with drinks being taxed based on how much alcohol they contain.
The result will see slightly higher tax on stronger drinks such as red wine and white cider but lower levels on sparkling wine and beer, something Mr Sunak heralded as good news for the UK’s growing sparkling wine industry.
Describing the previous system as “a mess” the Institute for Fiscal Studies welcomed the Chancellor’s announcements as “sensible.” As well as changes to alcohol duty he also announced a 5 percent cut on the tax applied to draught beer and cider- the biggest cut to beer duty for 50 years.
The British Beer and Pub Association described the measures as “great news” however cautioned how far these would go.
Their Chief Executive Emma McClarkin said: “the overall beer duty rate in the UK remains amongst the highest in Europe.”
“It is vital for Britain’s brewers, a world-class homegrown manufacturing success story, that the overall beer duty burden is reduced – not just duty on draught beer in pubs.”
Ms McClarkin also shared Tim Martin’s concerns about how far-reaching business rate cuts would be for pubs adding: “The 50 percent cut to business rates alone will save pubs £169 million. However, the cap of £110,000 per business is a huge dampener and means a significant number of pubs will not benefit from the relief at all.”
Whilst the Budget contained good news for low-income households with news of a rise in the National Living Wage pubs have expressed concern that this, added to existing pressures from rising food and energy costs, will get passed onto drinkers.
Boss of the City Pub Group Clive Waton told BBC Radio 4’s Today programme the price of beer “would probably have to go up by 25 to 30p a pint” as a result.
Commenting on this Wetherspoons’ Tim Martin told Express.co.uk: “Wage increases impact prices in pubs far more than supermarkets. That’s because about 30 percent of the price of a pint in a pub (around £4 on average) is staff wages- ie £1.20 per pint.”
“In a supermarket wages are about 10 percent ( supermarket wages are a lower percentage of their sales) of the selling price of £1 ie about 10p.”
“So putting up the wage rate will widen the disparity between pubs and supermarket prices, which is already huge, since pubs will need to increase prices, to cover costs, as City Pub Company has said, by more than supermarkets.”
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Mr Martin has long called out the tax disparity between pubs and supermarkets which he described as “the Sword of Damocles hanging over pubs and restaurants.”
He further explained: “If the government increases the minimum wage it should also instigate tax equality between pubs and supermarkets.”
“Pubs normally pay 20 percent vat on food sales (there is a short term pandemic-related reduction to 12.5 percent for now) and about 20 pence a pint of business rates.”
“Supermarkets pay zero vat on food and about 2 pence a pint of business rates.”
“If tax equality was instigated, creating a level playing field, the pub industry would support the minimum wage increase.”
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