Alcohol & tobacco: Smokers and drinkers pay the price for their habit

James Thompson
Thursday 23 April 2009 00:00 BST

The Chancellor was accused of "signing the death warrant" of thousands of Britain's pub and tens of thousands of jobs. Pub groups said he had reneged on a promise to introduce inflation-linked price increases by hiking alcohol excise duty by 2 per cent.

Tobacco manufacturers, which have also been hit by a 2 per cent tax increase, aid the hike would, "undermine the progress made in reducing the level of tobacco smuggling". Cigarette makers complained that as Alistair Darling said the retail price index measure of inflation (RPI) is set to fall to minus 3 per cent by September, they had been hit by a 5 per cent rise.

Yesterday's tax rises lifted the price of a pint by 1p and added 7p to a packet of 20 cigarettes from midnight last night. Mr Darling said the measures would raise £6bn by 2012.

A spokesman for the British Beer & Pub Association (BBPA) said: "Today's Budget signs the death warrant for thousands of Britain's pubs and for tens of thousands of British jobs. Pubs play a vital role in the economy and in local communities. Yet six are closing every day and more than 2,000 have gone in the last 12 months alone.

He added that if Mr Darling had stuck to his "own sums" the beer industry should be the recipient of a cut in alcohol excise duty, given that the Chancellor said that, following the hefty rise in alcohol excise duty in 2008, the tax on alcohol would increase by 2 per cent above inflation in subsequent years.

In last year's Budget, the Chancellor announced that duty rates on all alcoholic drinks would increase by 9.1 per cent from 17 March 2008 and then in the November Pre-Budget Report he increased excise duty on beer, cider and wine by a further 8 per cent and spirits by 4 per cent.

Japan Tobacco International said that in the current economic climate many more consumers will seek out cheaper, illicit sources of tobacco, which will result in hard-pressed independent retailers losing customers at a time when the economy is in recession.

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