Monday 25 March 2013

The best thing about the budget

One of the best things about last week’s budget went unheralded among Liberal Democrats, probably because it was not something for which the party could claim sole credit (although Liberal Democrat MP Greg Mulholland played a big part in achieving it).

The Chancellor announced that the hated beer duty escalator would be scrapped, for good. Not only that, but the 3p rise in beer duty tax planned for this year was cancelled. Even better, beer duty was cut by 1p.

CAMRA (the Campaign for Real Ale) explains the significance of this move:
Beer duty will no longer rise automatically every year 2% above inflation, in turn keeping down the cost of your pint down the pub.
Since the escalator was introduced in 2008, beer tax has increased by 42%, driving up the cost of a pint and driving consumers away from their local pubs. In that time, 5,800 pubs have closed for good.
The brewing of craft beers is a booming industry in the UK, whose growth was being stunted by excessive taxation. Pubs, meanwhile, are a vital community resource and their loss corrodes society. The soaring price of beer is not the only reason pubs have closed but it is major contributory factor, encouraging more people to buy their beer from supermarkets and drink at home. Far from reducing irresponsible drinking, the beer duty escalator was counterproductive. It is a Labour policy we are well rid of.

The campaign is not over, though. We need to ensure that the tax cut is passed on to customers. As Greg Mulholland points out:
Greg has also previously called on the Minister to insist on a guarantee from the big pub owning companies that if, as we hope, the beer duty escalator is scrapped, that they pass this on and lower prices to their tenants so that this extra revenue is passed on to licensees and to pub customers and not simply into the pockets of the large pub companies to service their unsustainable debt levels.
And there’s another fly in the ointment. The wine and spirit industry has complained, with some justification, that it is unfair to single out beer for favourable treatment. Expect a legal challenge under EU competition law.

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