Alcohol tax up by two percent
Last year, the chancellor raised alcohol duty by an above-inflation 6 percent and said alcohol duty rates would increase by 2 percent above the rate of inflation in each of the next four years.
This "tax escalator" led to intensive public lobbying from alcohol and pub groups in recent months to scrap the plan.
Brewers and pub groups in the UK have been suffering from a combination of nationwide smoking bans in pubs, higher input costs and weaker consumer spending. The British Beer & Pub Association, or BBPA, estimates that 39 pubs are closing as a result each week.
The association says sales of beer are now at their lowest levels in almost 40 years, with more than 44,000 jobs lost in the brewing and pub industry between 2000 and 2005 and a further 75,000 jobs under threat.
The alcohol tax increase will add one penny to the price of a pint of beer, 13 pence to the price of a bottle of spirits and 4 pence to the price of a bottle of wine.
Pub operator JD Wetherspoon was quick to respond and announced that it will freeze drinks prices in its 700-odd pubs until the start of September.
Wetherspoon’s Chairman and Founder Tim Martin was quoted as saying: “We have pledged to maintain our drinks prices and not pass on the increased duty on alcohol to our customers.
In the current economic climate, we wish to ensure that our customers can continue to visit one of our pubs and enjoy a drink at an affordable price.
We do not agree with the government’s decision to increase duty on alcohol, however, our action will ensure that our customers do not have to pay extra for their drink as a result of the government’s duty increase.”
The decision to hold prices will obviously have cost implications for the business, although Wetherspoon declined to comment on what the impact of its move might be in financial terms.
On 1 April 2009, Wetherspoon was named the winner of the “best company” category in the Retailers’ Retailer of the Year awards. The awards are organised by the leisure and hospitality industry magazine, M&C Report. Nominations and votes for the best company award were made by senior executives from across the bar and restaurant industry itself.
