Wednesday, 9 December 2009

Who are you working for?

On the day when Alastair Darling, not surprisingly, confirmed that he was not going to cut beer duty when VAT went back up to 17½%, thus effectively imposing a stealth increase of 8%, it’s a sobering thought that the beer and pub industry makes five times more money for the government than it does for brewers and pub companies.

Oxford Economics conducted a study for the British Beer & Pub Association (BBPA) that compared the Government’s tax take on beer with the profits made by brewing and pub sector sales.

The study showed that the total taxes, including excise, VAT employment and corporation taxes, raised by the Government from beer sales totals £7.2bn. The profits made by brewing and the pub sector amounted to just £1.4bn.

The total UK beer market generates £19bn. The Government takes 84% of the £8.6bn total tax and profit generated by beer sales.

That makes all the hard work by licensees seem really worthwhile.

Edit: I see that Irish finance minister Brian Lenihan has actually cut alcohol duties in an otherwise hard-hitting austerity budget.

9 comments:

  1. Re: Linehan in Ireland

    Axe the beer tax (or whatever) and other industry initiatives are falling on deaf ears. Another increase in beer duty of just over 2% today. Very sly in its application too.

    Why the difference in Ireland? Serious question. Are the beer companies more threatening there? Or the government more willing to listen?

    Or is the fault this side of the Irish Sea? Beer associations/companies too supine and government too ignorant?

    Interesting.

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  2. I'm reading Pete Brown's 'Man Walks Into a Pub' at the moment and it seems as though taxing the hell out of beer is nothing new - governments have been jacking up the beer taxes at every opportunity for a good couple of hundred years at least.

    But interestingly, during WWII they actually took steps to protect the production of beer during and ensure that it was easily distributed (beer was never rationed, so Pete tells us) on the basis that it was a simple pleasure that kept people cheerful during difficult times (plus they could rake in all that extra tax revenue...)

    Maybe Mr Linehan is taking a leaf out of Winston Churchill's book?

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  3. The reason the Irish cut duty is twofold. One and the serious one is that it is an attempt to stem the cross border stuff. N Ireland is a cheap place for the Irish for drink, fuel and food. Particularly drink.

    Second, after how they have clobberd their taxpayers, the Irish Government probably thought they deserved a drink!

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  4. The drop in excise duty here is definitely about reducing cross border shopping. The difference in our currencies combines with our higher excise and VAT rates to make alcohol in Northern Ireland significantly cheaper than in the south. People travel for cheap booze, but while they are there they will buy other stuff too, which is all money going out of our economy.

    Another thing to note is that a significant proportion of TDs (Irish MPs) have a direct financial interest in the license trade.

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  5. That's much worse than I thought. So when I worked in the Civil Service, a lot of my money was going straight back to my employer? It would have saved time & trouble if they'd just deducted my beer bills at source.

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  6. If this country had a 100-mile land border with France I suspect our alcohol duties might be rather lower than they are at present.

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  7. Just to add some international flavor. It is a small globe and the WHO drive against smoking WILL target alcohol.

    "B.C. gov't should hike price of booze, say experts
    http://www.ctv.ca/servlet/ArticleNews/s ... hub=Health

    Thursday Dec. 10, 2009

    A report by the University of Victoria's Centre for Addictions Research says there are now nearly 2,000 alcohol-related deaths in the province each year. (tobacco is estimated to cause 5,700 deaths)(1)

    And it cites one recent study by the provincial health officer that found the annual health and enforcement costs associated with alcohol to the province were $57 million higher than the revenue from sales in 2003.

    According to the report, the government collected more than $1 billion in direct revenue from liquor in 2008.

    To curb the increasing consumption, the researchers recommend a minimum charge of $1.50 per standard drink in liquor stores and $3 in bars and restaurants, and decreasing the price of low-alcohol content drinks and increasing the price of those with higher alcohol content.

    The reports says there is international evidence that consumers are sensitive to the price of booze."


    Since my first post on this blog, I did became much more familiar with issues in the UK.
    The smoking bans for example are nearly identical, so is the events leading up to it.
    From what I can see, the UK was more of a follower of Canada but the end result is much the same.
    Will alcohol be much different?

    flex

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  8. Anon: you're not working for FOREST by any chance, are you?

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  9. No chance at all.
    As a matter of fact, not working for any tobacco related company or any civil liberty organization either.
    Now that I answered that question, will add to my previous post.

    It is not just the smoking bans similar but also the prices of tobacco products and so is the evolution which lead to those high prices.
    I see far more similarities between the tobacco issues between Canada and the UK, than Canada and the US presently.
    That fact probably will also became apparent with the alcohol issue.
    As it stands right now, cigarettes are cheaper in the US and alcohol is much, much cheaper.
    Can buy some whiskey imported from Canada in the US for one third of the price it cost me to buy it in Canada, although the premium brands
    does have a smaller gap.
    Canadian beer is also cheaper there. Some are much cheaper.
    Perhaps " government" run health care have something to do with that but it is only a guess on my part.
    An educated guess though.

    Just for the record; this same " research " group made a similar study about tobacco 4 or 5 years ago.
    One thing You can be assured :
    " and decreasing the price of low-alcohol content drinks and increasing the price of those with higher alcohol content."

    the call for the decrease will be ignored and the call for the increase will be embraced.

    flex

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