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Daily Mail

Cheers Jeremy! Hunt's 'Brexit pubs guarantee' cut to tax on pints

By David Wilcock, Deputy Political Editor For Mailonline,

2023-03-15

Jeremy Hunt today handed a Brexit lifeline to UK pubs as he unveiled a promise to keep tax on draught pints lower than that paid on supermarket cans and bottles.

The Chancellor unveiled a surprise Brexit Pubs Guarantee that will keep the levy on beer and cider 11p lower that shop-bought booze amid sweeping changes to the way all alcohol is taxed.

His move to increase draught rate relief from 5 per cent to 9.5 per cent was welcomed by hospitality leaders at a time when the sector is struggling to recover from Covid and wider economic problems.

However it was not enough to stave off criticism over wider changes to the tax system due to come into force in the summer, especially affecting the cost of a bottle of wine and spirits.

A move to tax drinks according to their alcohol content - the stronger the beverage the higher the levy - means millions of drinkers face seeing the price of red and whites rise by 20 per cent - or 44p per bottle- according to the Wine and Spirits Trade Association.

It would represent the largest rises in half a century in the tax on a bottle of red or white.

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However, there is some good news for drinkers - other 'over taxed' drinks like sparkling wines and Baileys will see their tax rate go down under the reform.

The Chancellor used today's Budget to confirm that alcohol duties across the board  rise with inflation - 10.1 per cent RPI - on August 1 at the same time as the reform is introduced in what has been criticised as a 'double-pronged tax raid' on drinkers.

Mr Hunt told MPs the change to beer tax will apply to 'every pub in Northern Ireland ' due to the Windsor Framework unveiled by Mr Sunak a fortnight ago but yet to be passed by MPs. He added: 'British ale may be warm, but the duty on a pint is frozen.'

But British Beer and Pub Association chief executive Emma McClarkin said: 'The cut to draught duty as part of the alcohol duty reform is positive and we hope that it will result in a boost for our pubs this summer.

'However, the fact is our industry will be facing an overall tax hike, not a reduction, come August.'

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Miles Beale, Chief Executive of the Wine and Spirit Trade Association, added: 'The Government's decision to punish wine and spirit businesses and consumers with a 10 per cent duty hike for spirits and a massive 20 per cent for wine, from 1 August, is staggering. It is the largest increase in wine duty since 1975.

'This Budget directly contradicts what this Government claims it is trying to tackle. It will further fuel inflation. It will heap more misery on consumers. And it will damage British business, especially those in the hospitality supply chain, who are still trying to recover from the pandemic.'

UKHospitality chief executive Kate Nicholls said: 'The reduction in draught duty is positive and we hope this will incentivise more visits to our pubs, restaurants and hotel bars.'

She also urged brewers to pass on the saving to venues and consider widening the measure across the pub market.

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The BBPA said UK beer duty was 12 per cent higher than Germany's last year and £1 in every £3 was paid to Treasury in tax.

Nuno Teles, the managing director of Johnny Walker whisky manufacturer Diageo, said: 'Today's decision is a hammer blow for pubs, drinkers and for Scotch, a UK homegrown industry supporting tens of thousands of jobs. We urge the Chancellor to reverse this punitive and inflationary tax hike.'

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