Fairer beer tax 'would create win-win situation'

A fairer tax system for beer would help to create 30,000 jobs and boost the Treasury's coffers, an industry body said today.

The British Beer & Pub Association (BBPA) said taxing alcohol according to its strength would create thousands of jobs and bring in around £250 million in extra revenues from employment taxes and corporation tax.

In its submission to the Home Office consultation on a proposed overhaul of licensing laws, BBPA chief executive Brigid Simmonds said a fair deal for beer "would create a win-win situation for all".

"The new Government now has a great opportunity to bring fairness into our duty system - with huge potential benefits for the Treasury and the UK economy," she said.

"We've had many years of duty changes that have favoured other categories of drink - yet taxing beer fairly would create thousands of new jobs, and substantial extra tax revenues.

"Beer is also a low alcohol drink of choice and should be treated differently to other stronger alcoholic beverages.

"There is potential for a huge success story that could be grasped by the new Government. Everyone would benefit from a new and fair approach."

BBPA figures showed that under the current system, alcohol in the form of beer costs 42p per unit on average compared with 37p for vodka, 38p for gin, and 33p for cider.

And about 29,500 jobs would be created, mostly in pubs and the hospitality sector, if the duty system was rebalanced between different types of drinks, with the duty rate for different types of drinks increasing with strength, research by Oxford Economics found.

The call comes as Guinness manufacturer Diageo also proposed a staged reform of excise duty so that stronger drinks, which contain more alcohol, would attract more tax.

Simon Litherland, managing director of Diageo Great Britain, said: "Our recommendation to the Treasury is the fairest and most transparent way to approach taxation of alcohol.

"It will bring revenue to the Government and will mean that the more alcohol in the drink, the more tax it will pay."

Equalising the tax on all alcohol would generate between £524 million and £1.9 billion a year for the Treasury, an analysis by Volterra Consulting found.

And a survey of more than 1,000 adults earlier this month found 63% of those polled backed a system in which the same amount of alcohol was taxed exactly the same, regardless of the drink type, Diageo said.