Rising UK taxes to blame for low alcohol consumption, BBPA

By Helen Glaberson

- Last updated on GMT

Related tags: Tax, Uk

Increasing taxes are to blame for stagnant alcohol consumption rates in the UK, claims the British Beer & Pub Association (BBPA).

At 8.4 litres of alcohol per head per year, UK alcohol consumption rates have not budged since last year, according to recently released figures in the UK beer and pub trade’s Statistical Handbook 2011.

Based on Treasury tax returns, the report said the amount of litres drunk annually in the UK are 11 per cent lower than they were in 2004, when a marked decline in consumption began.

While there was a small 0.6 per cent per cent rise in UK consumption per head in 2010, drinking levels remain at a 10-year low, according to the report.

The BBPA said the previous three years have been deeply damaging to British brewers.

“Beer has been facing a long-term decline in volumes,”​ a spokesperson for the organisation told BeverageDaily.com.

“There is no doubt that this has been the underlying cause of the trend towards brewery closures in recent years, despite the large amount of innovation and new entrants in the sector.”

Tax gap

UK alcohol consumption remains one of the lowest in Europe, lagging far behind the biggest consumers, Czech Republic, Romania and Austria.

Taxes on beer and wine in the UK are now the second highest in the EU and fourth highest on spirits, said the BBPA.

The gap between British alcohol taxes and all its “major​” neighbours grew in 2011, according to the organisation.

Taxes in the UK are now eight times higher than France, and 11 times higher than Germany, it claims.

“UK taxes now outstrip those of traditional high-tax regimes in Scandinavia, with the sole exception of Finland,”​ added the BBPA.

In a bid to raise UK consumption, the spokesperson said the BBPA wants to get more people to make beer their drink of choice, especially women.

He said the organisation also needs to persuade the government to put an end to above inflation beer tax rises, which have gone up by 35 per cent in the past three years.

Fighting a battle

Pierre-Olivier Bergeron, secretary general of The Brewers of Europe agreed that excise duties on beer in the UK and in a number of other European countries are too high.

In the brewing sector tax increases have led to reduced sales and lower profits, job losses, reduced tax receipts from VAT, excise, income taxes, payroll taxes and social security contributions, he told this publication.

Bergeron said the system and rates of excise duties were a priority issue in all of the trade organisation’s member associations and for brewers across the globe.

“With governments around Europe looking to identify extra sources of funds to plug budget gaps, we and our members are fighting a constant battle to prove that excise duties on beer should not be increased,”​ he added.

The secretary general said recent reports on the brewing sector both by Price Waterhouse Coopers (2010) and by Ernst & Young (March 2011) showed that excise duty increases on beer can also lead to reduced government revenues.

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