Budget 2020: Industry warns over impact of alcohol tax rise

By Sophie Witts contact

- Last updated on GMT

Budget 2020 alcohol tax rise impact pubs restaurants

Related tags: Beer

The possibility of an automatic rise in alcohol duty in next week’s Budget has sparked warnings over the impact of price increases from industry trade bodies.

Update: To see what the 2020 Budget means for hospitality click here.

Chancellor Rishi Sunak will set out the Government's spending plans in his first Budget on 11 March. 

Under current policy all alcohol duties are set to rise in line with RPI Inflation,​ currently forecast at 2.8%.

This would add approximately 6p to the cost of a 750ml bottle of still wine and 8p to the cost of 750ml bottles of sparkling or fortified wines, according to the Wine and Spirits Trade Association (WSTA).

A 70cl bottle of 37.5% vodka would rise 21p, while a 70cl bottle of 40% gin would rise 23p. 

It is not clear when any duty changes could come in to force, but the WSTA warns it could be immediate. 

Sales impact

Tax on beer, cider and spirits was frozen in 2019 following Philip Hammond’s final 2018 Budget.​ Wine, which continued to rise in line with inflation, has seen a 12% increase in duty since 2014.

Restaurateurs say this had led to a fall in wine sales,​ and in January a group including Corbin & King CEO Jeremy King and Hawksmoor wine director Mark Quick wrote to the Government calling for a cut in wine tax.

“We are experiencing first-hand how the hospitality industry is being hit by this fall in wine sales, with businesses in the sector being put an increasing risk of failure,” they wrote. 

The British Beer and Pub Association (BBPA) says the cut in beer duty saw sales rise 1.1% to a total volume of over eight billion pints in 2019, but warns a rise in the tax could hamper further growth.

The BBPA is calling for a 2% cut in duty on beer in next week's Budget, while the WSTA hopes to see a 2% reduction across all alcohol categories.

“Beer sales increasing is clearly good news for our sector,” says Emma McClarkin, chief executive of the BBPA. “However, this growth will be stifled if the Government goes ahead with its planned increase to beer duty on March 11.

“Pubs and brewers have an overwhelmingly positive impact not just on the UK economy - supporting 900,000 jobs - but also socially and culturally across the UK, so it’s important the Chancellor actively supports them.”

The WSTA says it expects the Government to also announce a review in to alcohol duties, as was promised in the 2019 Conservative manifesto. 

Related topics: Business & Legislation

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