Consumer: Pint of beer to break £3 barrier

The VAT hike will lead to the typical cost of a pint of beer in a pub breaking through the £3 barrier for the first time, a trade body said today.

The British Beer & Pub Association (BBPA) said the increase in VAT to 20% would add a further 6p to the cost of a pint of beer, on top of the 26% rise in Beer Tax seen during the past two years.

It warned that the "double whammy" of the increase to duty and VAT was placing "shackles" on the pub and hospitality sector at a time when it could be creating jobs, and it urged the Government to abandon plans for further Beer Tax increases.

The group said the tax increase would hit pubs, in which beer is the key seller, more than other retailers, as many are small, family-run businesses, which are less able to absorb the cost than big supermarkets.

Research carried out for the group by Oxford Economics suggests that the VAT hike will lead to the loss of around 8,800 jobs related to the sale of beer.

The BBPA also expressed concern about the Government's plans to increase beer duty above inflation in the Budget in March, through its tax escalator.

It said its research suggested that rising taxes would actually lead to falling revenues and a further 10,000 job losses in the sector as beer sales would fall sharply.

Instead it would like the Government to lower the rate of VAT charged in the hospitality trade, claiming there was growing evidence that similar moves across Europe were helping to create jobs and boost tax revenues.

BBPA chief executive Brigid Simmonds said: "Today's VAT rise is another tax blow for the industry. The Treasury is piling tax on top of tax.

"The 26% rise in beer duty in the past two years will now have an even higher VAT rate charged on top of it. The Treasury needs to think again

when it comes to plans for further Beer Tax hikes in March.

"The Government has recognised that tax increases harm pubs, and wants

policies that don't damage the sector. Now is the time to translate this wish into action, with policies that keep pubs open, and create jobs and wealth in the UK economy."