It’s a give … and take!
Chancellor Alistair Darling has announced a 2.5 percent cut in VAT to 15 percent until the end of next year – but this will be offset with an eight percent increase on alcohol duty. As a consequence, licensees will not be able to drop the price of a pint of beer as had been hoped in the light of the VAT cut. Both the VAT drop and the alcohol duty rise came into effect on 1 December 2008. Needless to add that the future of Britain’s pubs has been put at risk just as the UK economy is facing a downturn.
At the end of November 2008 Chancellor Alistair Darling announced there would be an eight percent hike on alcohol tax – meaning that duty has now risen 17 percent this year alone.
He also confirmed that VAT would be cut from 17.5 percent to 15 percent, but any benefits to the trade have been swallowed up by the tax rise.
It is expected the duty increase will slap an extra 3 pence on a pint of beer at a time when many licensees had hoped to be able to reduce prices in light of the VAT cut.
What makes matters worse is that while VAT reverts to 17.5 per cent in 13 months time, alcohol duty is not expected to be lowered at that time.
Licensees are also furious that they have only days to implement the changes in VAT. The Association of Licensed Multiple Retailers (ALMR) says that licensees could be facing bills of up to GBP 570 (EUR 686) each just to reprint menus and re-programme tills at such short notice.
