The 2011 budget confirmed that the alcohol duty escalator will continue with alcohol taxed at 2% above the rate of inflation (RPI).
The Treasury stated it would add four pence to the price of a pint of beer, 15 pence to a bottle of wine, and 54 pence to a bottle of spirits. It was also confirmed that later this year tax on beers below 2.8% would be cut by 50 per cent - and duty on beers above 7.5 per cent would rise (details here).
The announcement was reported as bad news for the pub trade who had called for a freeze in duty. Research commissioned by the British Beer and Pub Association claimed that a duty freeze could have saved over 10,000 jobs and generated £40m in extra tax revenue. BBPA Chief Executive, Brigid Simmonds said the "policy hampers growth and damages pubs and the communities which rely on them". The Morning Advertiser said it was a "devasting blow" and highlighted a full list of trade responses.
However using taxation as a pricing measure has been advocated by politicians and health groups. Dr Peter Rice, chair of the Royal College of Psychiatrists in Scotland welcomed the announcement. "Alcohol misuse has a considerable effect on the nation’s health, including our mental health, and this duty increase above the rate of inflation will help tackle one of the UK’s biggest health and social problems." Full press release.
See here for a BBC summary of the 2011 Budget.
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