Treasury moves to tax higher strength beers

Beers with an ABV above 7.5 per cent will face extra tax as part of the government's plans to tackle alcohol related misuse.

The Treasury's Review of Alcohol Taxation, published today, also states that beers with a strength of 2.8 per cent ABV or lower will face a reduced rate of duty. The aim is to encourage brewers to produce lower strength beers and reduce consumption of 'super strength' lagers.

But the Association of Licensed Multiple Retailers (ALMR) described the review as a missed opportunity.

Head of communications Kate Nicholls said: "We have been arguing for some time that duty is a blunt instrument and is ineffective in regulating the price at which alcohol is sold. This review was a unique opportunity to address that and deliver on the government's pledge to tackle irresponsible promotions and ban below cost selling.

"Today's report clearly demonstrates that government policy on duty has failed in that regard. The duty escalator was explicitly introduced to curb consumption but the Report acknowledges that alcohol prices in supermarkets have not risen by as much as alcohol duties over recent years and in contrast prices in pubs have risen by much more than duty.

"As a result, consumption has simply switched away from a supervised environment."

Brigid Simmonds, chief executive of the British Beer & Pub Association welcomed the 2.8 per cent move, saying it would "provide a welcome incentive for further investment in these beers, and encourage people to choose lower-strength drinks."

"There are also welcome signs that when it comes to beer and other lower-strength drinks, the government recognises that moving towards duty based solely on alcohol content across all drinks would 'significantly penalise responsible drinkers.' It is also encouraging to see an explicit recognition that pubs are hit far more than supermarkets when it comes to duty increases.

But Simmonds said that higher-strength beers accounted for less than half of one per cent of total alcohol sales, and less than one per cent of beer sales and that duty rates remain untouched for higher strength drinks such as spirits and wine.

"Overall, we need a duty system that nudges consumers to choose lower-strength, pub-based drinks such as beer.

"It would create a win-win situation - a more balanced system of alcohol taxation that would bring in more revenues, and create up to 30,000 jobs in the UK," she said.

CAMRA also welcomed the 2.8 per cent tax break.

Mike Benner, CAMRA chief executive said: "News that tax will be increased on beers above 7.5% abv is disappointing. However we are pleased that this widely expected increase will be counterbalanced by a tax cut on low strength beers. Reduced tax on low strength beers is good news for pub goers at a time when 29 pubs are closing every week. This move will incentivise brewers to invest in producing new low strength real ales packed full of flavour."

"Current EU rules mean that the UK Government can only reduce duty on low strength beers at or below 2.8% abv. These rules are under review and, at a meeting with the European Commission tomorrow, CAMRA will push for the 2.8% abv cap to be increased, potentially up to 3.5% abv".