The Government could be £5million better off and save 10,000 jobs if it freezes beer tax at this month’s Budget, a report published by the British Beer and Pub Association has found.
A beer duty freeze at the 2013 Budget would save thousands of jobs AND save the Treasury money, according to the research commissioned by the BBPA and published by Oxford Economics.
The report ‘Beer, Pubs & the Budget 2013’ said that ending the unpopular beer duty escalator in this month’s budget would save jobs, without any overall loss of revenue to the Treasury.
If the Government goes ahead with the planned five per cent rise in the beer duty escalator in the coming Budget, this will bring the increase in beer tax to a staggering 50 per cent over the past five years.
But the research has found that if beer duty were in fact frozen, 5,000 jobs could be saved, rising to 10,000 by 2014-15.
The forecast by Oxford Economics predicts that the Government would see a decline of £87million in duty revenue in 2013-14 from freezing beer duty, but would gain an additional £43million from other taxes, including VAT, corporation tax and employment tax, because of fewer pubs going bust.
In addition to the avoidance of job losses, this would mean the Government would not need to pay out an additional £47million in social security payments.
The forecast therefore shows the Government could be £5million better off in 2013-14 by freezing beer duty, compared to the current policy of the beer duty escalator, while saving 5,000 jobs at the same time.
The UK brewing and pub industry contributes significantly to the UK economy. In January 2012, Oxford Economics found that beer and pubs supported 949,000 jobs in the UK, paying almost £13bn in wages.
Of these, almost half (46 per cent) were aged between 16 and 24 – the age group which is presently facing the highest levels of unemployment. Freezing the beer tax would therefore be an ideal way of saving thousands of jobs for young people, and decreasing the unemployment levels.
Currently, beer tax in Britain is higher than in any other EU country, apart from Finland.
Brigid Simmonds, chief executive of BBPA, said: “Far from hitting the bottom line, a duty freeze would raise revenues, protect thousands of jobs, allow us to create yet more jobs and help one of our greatest national assets – our network of much-loved British pubs, still struggling in difficult economic times. I hope this will persuade the Government that now is the time for change.”
With this new research it is difficult to see how the Chancellor can ignore calls to freeze the beer duty escalator.
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