Beer Tax Row Escalates Ahead Of The Budget - TaxPayers Alliance Calls On Osborne To Scrap Increase

George Osborne is to face another round of calls to scrap the beer duty escalator in the 2013 Budget.

The TaxPayers Alliance has stepped up a campaign to get the chancellor to abolish a forthcoming increase in the tax on beer, with new 'Mash Beer Tax' beer mats being distributed to pubs across the country.

Beer Duty has increased by more than 40% in just four years, meaning that today around one-third of the price of a pint at your local pub goes straight to the taxman.

Over the past few months, pub groups, brewers, MPs and now the TaxPayer's Alliance have all stressed that the duty increase will bring little, if any, extra money into the Treasury, and that the move will make the economy worse by forcing pubs to lay off staff or even close down.

According to the Campaign for Real Ale, more than 5,800 pubs have closed since the Beer Duty Escalator was introduced in 2008 and they continue to close at a rate of 18 a week.

Matthew Sinclair, chief executive of the TaxPayers' Alliance, said: "In opposition, Conservative and Lib Dem politicians were quick to decry the Beer Duty Escalator for the burden it places on people wanting to enjoy a drink and the threat it poses to pubs up and down the country. They're now in a position to do something about it.

"The abolition of the Beer Duty Escalator is long overdue and a freeze in the rate at this year's Budget would help people coping with so many other pressures on their finances."

A graph showing the UK's beer duty levels compared to the rest of Europe

In November, an impassioned 180 minute debate on the scrapping of the beer tax increase took place in the House of Commons, resulting in an unanimous vote for the government to review it.

MPs Andrew Griffiths and Greg Mulholland have been leading the charge; Speaking to the house on 1 November, Griffiths said: "The Treasury's own projections show the beer duty escalator will bring in no extra money at all, but it will cost jobs at breweries...all we're calling for is fairness when it comes to beer duty."

Mulholland added: "I'm astounded by the level of understanding here today in the house, clearly the chamber gets it, and now it's our job to make sure the Treasury gets it.

"Most pubs get 60% of their income from beer; they rely on selling it more than wine, cider or anything else. A fairer taxation would help in terms of growth...and employment, particularly of young people."

The house also heard how more than one million people are employed by the pub industry, half of which are young people.

"Oxford Economics has shown that by removing this escalator, the government would save 5,000 jobs in the first year and stop the closure of hundreds of pubs - this is a huge opportunity to bring fairness and balance to the situation," Mulholland continued.

Some of the beer mats will be distributed to pubs across the country - Pic credit: TaxPayers' Alliance

Despite the solid backing for the issue to be aired in the House, Treasury minister Sajid Javid's response was muted.

After thanking the ministers for the debate, and the 104,000 members of the public for their vote to bring the debate before the house, Javid laboured the point that the escalator was a policy the government had inherited from the previous Labour government.

He also stated that cancelling the escalator would remove £35 million from the 2013 budget and £70m in 2014, which would need to be recouped elsewhere.

"The sad truth is pubs have been closing for many years due to many changes in society, not just beer duties," he said, before highlighting the various small business tax benefits available to the smaller breweries and pubs.

Pint for pint, British beer drinkers now pay nine times more in beer tax than the French, and 13 times more than the Germans. In the EU, only Finland slaps a higher tax on beer. The TayPayer's Alliance is now encouraging the public to log onto to email their local MP about the issue.

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