The British Beer & Pub Association (BBPA) has issued a warning that today’s rising inflation rate should not be used to ‘ratchet up’ beer taxes in the autumn Budget.
News today that British inflation hit its joint highest in more than five years during August has sparked fears that beer could take a tax hike during the upcoming Autumn Budget, which is expected at the end of November or beginning of December.
The planned inflation-based beer duty increase could see the benefits of the government’s three, one penny cuts in beer duty undone in a single year, the BBPA said.
As previously reported by Imbibe, the government is increasingly being urged to drop the retail price index (RPI) as a measure of inflation, with groups including the Association of Licensed Multiple Retailers (ALMR) and the Office for National Statistics (ONS) backing calls to switch to the consumer price index (CPIH) before 2020. The latest figures show that while RPI rose by 3.9%, CPI showed an increase of 2.9%.
The BBPA claims that the 3.9% tax rise in the March Budget cost the sector £130 million. It said that with the inflation figure expected to worsen in October, the government is in danger of creating a ‘vicious circle’, with tax hikes fuelling further price inflation in the sector.
‘A second beer tax hike this year, based on inflation, would undo much of the good work done in tackling Britain’s sky-high rates of beer duty,’ BBPA chief executive, Brigid Simmonds, said.
‘Abolishing the hated beer duty escalator saved many pubs and jobs, after years of unsustainable tax rises. With the challenge of Brexit, and a range of other cost pressures, the chancellor should abandon plans for a beer duty increase in the budget.’