Spirit producer tax plans would 'devastate' pubs

Calls by spirits companies to overhaul the alcohol duty system would "devastate" beer production and lead to more pub closures, according to trade...

Calls by spirits companies to overhaul the alcohol duty system would "devastate" beer production and lead to more pub closures, according to trade figures.

Major players, including Diageo, this week called for duty levels to be reformed in response to the coalition government's review of the alcohol tax system.

The Scotch Whisky Association and Diageo, whose brands include Smirnoff, have called for all units of alcohol to be taxed equally - spirits are currently taxed at higher levels than beer, cider and wine.

They claim the move could generate up to £1.9bn a year for the Treasury.

But Jonathan Mail, head of policy at CAMRA, said the plan has huge implications for pubs.

"Such a move would devastate beer production in the UK and would force more pubs to close because beer is so important to trade," he said.

"Beer costs three-and-a-times more to produce than spirits and that needs to be recognised.

"The gap between beer and spirits duty has already narrowed since 1995 and taxing beer and spirits at the same rate would result in expensive beer and cheap spirits."

He added 'equalising' duty levels would add 17p of duty to every beer produced and would lead to huge increases in prices at the pump.

CAMRA has instead called for the government to give tax breaks to lower ABV beers.

In its submission the British Beer & Pub Association (BBPA) has also urged the government to set duty levels in relation to the strength of drinks.

And the trade bodies have found an unlikely ally in health group Alcohol Concern.

In its submission it calls for duty rates on cider to be brought in line with beer and for beers with ABV's of 3.7 per cent or lower to face no additional duty hikes.

Chancellor George Osborne unveiled plans to review alcohol tax and pricing to "tackle binge-drinking" in the emergency Budget.

At the same time he unveiled VAT would increase to a rate of 20 per cent and that the he would be reversing a 10 per cent hike on cider duty imposed by Labour.

The government is set to respond to the tax review later in the autumn.