Brexit could mean lower beer duty, says new APPBG chair
Speaking exclusively to The Morning Advertiser, Wood, who took on the role in July, said Brexit could provide the opportunity to revise the amount of duty paid for beer in the on-trade, claiming European Union legislation currently made it impossible to do so.
“We are going to want to look at whether beer duty should be restructured altogether to reflect the particular contribution the on-trade makes and have a reduced rate of duty for beer served in pubs and bars,” he said.
“Obviously we cannot do that within the EU, but from spring 2019 that would be an option that would be available to the Treasury.”
He added the brewing and pub sectors would be encouraged to give their views on the impact of any policy changes.
A British Beer and Pub Association spokesman said: "Mike Wood is right to say that because of EU directives, it isn’t possible at present to cut on-trade beer rates without cutting off-trade rates.
'Lower rates of tax'
"Post-Brexit, we are calling for the Government to look at allowing lower rates of tax on draught beer, for example, as well as lower rates for lower strength beers, which are also currently constrained by EU law.
"Overall, we need a more competitive excise duty regime and a cut in duty in the Budget is our key current objective, given that UK beer duty rates are three times higher than the EU average."
Beer duty:
The UK pays the second highest rate of beer duty in Europe, closely behind Finland, which pays 72p per pint.
Beer drinkers in both Germany and Spain, which are the two cheapest countries, pay just 4p in duty a pint.
This means the average pint costs Germans and the Spanish around £2.30, while Brits pay an average of £3.33.
Top 10 most expensive pints (beer duty):
- 72p – Finland
- 53p – UK
- 50p – Ireland
- 43p – Sweden
- 27p – Slovenia
- 17p – Holland
- 16p – Denmark
- 14.6p – Italy
- 14.1p – Greece
- 13p – Cyprus
The UK currently pays one of the highest beer duty rates in Europe – 53p per pint (see box right).
Recent Budgets have increased beer duty above inflation after 1p cuts were made between 2013 and 2015.
Campaigners have consistently called for cuts to beer duty, more so now in the lead up to the Budget in November.
One current campaign emphasises the 39% rise in tax beer drinkers have endured in the past decade.
Wood said the APPBG would look to hold an investigation into the issue in the spring so that the Treasury could consider the issue in time for next year’s November Budget. This would give the Government time to have something in place for April 2019.
“Obviously, in the spring, alcohol duties went up tied to inflation. That was disappointing but what would be a particular blow is if the second budget of this year had it going up again,” he said.
'Beer duty escalator'
“This would essentially be a return to days of the hated beer duty escalator and would have a huge impact on the sector.”
He is lobbying hard for the sector and has a meeting with the Treasury in three weeks to talk through the arguments on beer duty and why a review of business rates is also needed.
“Getting that [beer duty] freeze is going to be difficult enough for November as it is not where the Treasury’s default position would be,” he warned.
“It would be impossible if we have some parts of the industry saying we want to be focusing on progressive beer duty.”
He also revealed that he is working to secure a parliamentary debate on the way the beer and pub sector is taxed.
Separately from the APPBG, a letter is being sent to the Chancellor from a group of Conservative MPs, explaining why pubs are so important and their positive economic and social contribution.
