New Study Reveals Government Profiting Heavily from Beer Sales

Thu, 10 Dec 2009

New research from Oxford Economics has revealed that the government makes five times as much from the sale of beer in Britain than brewers and pub companies. The study was commissioned by the British Beer and Pub Association (BBPA) and reveals how the government raised £7.2 billion in taxes, though that figure does include VAT, employment, excise and corporation taxes. In comparison, the profits of the brewing and pub sector on beer sales totalled £1.4 billion.

Chief Executive of the BBPA, Brigid Simmonds, criticised the government, claiming that companies profit margins ‘are being squeezed wafer thin’ at a time of economic difficulty while the government ‘is extracting enormous value from the beer sector in tax ’. Mrs Simmonds acknowledged that taxes on beer have a role to play in public finances, but warned that they were becoming unsustainable for pubs . Alcohol is seen as an easy target for tax increases, though beer appears to be taxed more heavily than wine or spirits .

Aggravation at the findings of the study are unlikely to be helped by the Chancellor’s announcement this week that VAT on beer will return to 17.5 per cent as proposed on January 1st. The BBPA revealed that 92 MPs have signed an Early Day Motion opposing the increase, while Pubcos has been campaigning for the government to remove the 8 per cent increase in beer duty when the VAT rate is restored to 17.5 per cent.
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