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Industry fury at pre-Budget duty rise

Published:  25 November, 2008

Drinks industry leaders have reacted with fury at news that the government will again increase the duty on alcohol.

Drinks industry leaders have reacted with fury at news that the government will again increase the duty on alcohol.

In his pre-Budget report yesterday, Chancellor Alistair Darling announced that VAT would be cut from 17.5% to 15%, but that the duty on alcohol would rise by 8% in order to keep it at the same price for consumers.

The move follows a 9% excise duty rise in March.

Gavin Hewitt, chief executive of the Scotch Whisky Association (SWA), condemned the move, saying: "There is no logic to any duty increase. Alcohol revenues have already fallen by £40 million this year on the back of the 9% excise rise in March.

"It disadvantages Scotch Whisky again at home and, possibly, overseas. The Treasury is likely to lose more revenue at a time when it needs every penny."

The SWA estimates that the move will add another 29p on to a standard bottle of Scotch Whisky.

Pub and bar group the Association of Licensed Multiple Retailers (ALMR) has also reacted with "disbelief and dismay" at the news. The group says that the latest increase in duty places Britain's pub industry at the heart of a huge bet on the British economy recovering by the end of 2009.

"The whole of today's announcement is one big gamble and yet again the Chancellor is risking the future of Britain's pub industry. Today's pre-Budget Report is entirely based on the assumption that the economy will grow again in 2010 which is when the new personal taxation starts to bite," said ALMR chief executive, Nick Bish.

He continued: "But for pubs the tax grab starts next week, continues in April with the Duty Escalator and strikes again on New Years Day 2010 when the VAT goes back to 17.5%.

"Mr Darling is squeezing pubs and bars for the stake money for this gamble and all based on optimistic Treasury forecasts of economic recovery by 2015; these will inevitably be wrong - how wrong we don't yet know."

The news is likely to be equally disheartening for consumers, who will be paying the price for bailing out the economy, say the Wine and Spirit Trade Association (WSTA). Jeremy Beadles, chief executive of the WSTA, said: "The Chancellor has given consumers no cause to celebrate this Christmas.

"This year he will have increased tax on alcohol by a massive 17%, hurting consumers when they have little else to cheer about. It's the wrong tax rise at the wrong time."

The cut in VAT will come into effect on December 1 and continue for 13 months. In his speech yesterday, Darling urged retailers to pass on the cut to shoppers as soon as they could.