Chancellor’s booze tax hike slammed as ‘miserable’ as British beer costs to soar
The hospitality industry has hit out at a possible tax hike on wine and spirits, warning that it would be a “depressing prospect” for the struggling sector
The hospitality sector has launched a scathing attack on potential tax rises for wine and spirits, branding it a “depressing prospect” for an already beleaguered industry. Reports suggest Chancellor Rachel Reeves is mulling over a 4.5% hike in alcohol taxes, bringing them in line with higher inflation readings.
“We’re all fed up with having to put up prices up, because we know that it’s going to cheese off our customers, but we’ve got very little option,” said Clive Watson, founder of The City Pub Group.
“If we don’t put the prices up to pay for the tax increases, then the profitability of the business goes down even further.”
The Wine and Spirits Trade Association has calculated that an inflation-linked levy would tack on 14p to a bottle of Prosecco, 16p to a bottle of red wine and 47p to a bottle of gin, as reported by City AM.
“Another duty increase… is a pretty depressing prospect,” Miles Beale, chief executive of the Wine and Spirit Trade Association said.
Beale highlighted that additional tax pressures hammering the sector – including expensive glass tax, National Insurance rises, minimum wage increases and slashed business rates relief – are equally destructive, with consumers now paying a pound or more extra for wine and spirits in just over a year.
A string of “punishing tax hikes” has meant booze sales have “been in steady decline since 2023, which has proved to be extremely damaging for the sector,” Beale said. So far this financial year, overall alcohol duty receipts are down almost £300m.
If this trend continues for the rest of the financial year, then receipts are set to come down by almost £1bn than previously forecast. Watson cautioned that punters are being put off their local boozers and eateries due to spiralling costs.
“A lot of pub companies I know have deferred any capex plans for next year until the budget comes through,” Watson said.
“It doesn’t just affect the number of pubs or restaurants…[but the] staff who work in this. It affects all the associated industries, like the food suppliers, the drink suppliers.”
Of the 164,641 job losses in the UK since the Budget last October, almost 89,000 have been lost in hospitality. The magnitude of redundancies is three times worse than estimated by the Office for Budget Responsibility, which predicted 50,000 job losses as a direct result of changes to employer NICs.
“I don’t think the government understands that higher taxes means higher prices as well,” Watson said. “This death by 1,000 cuts is is not helping anyone, least of all the government.”
Boozers and bars are shutting at the fastest rate witnessed this century, City AM analysis found, as mounting expenses squeeze many in the hospitality sector to the point of collapse. A staggering 449 British pubs and bar businesses have been forced to appoint liquidators or administrators in the first 10 months of this year, marking the highest number in over two decades, as per figures compiled from insolvency disclosures.
This signifies a 5% increase compared to the same period last year, and a more than threefold rise since 2015. The hospitality sector is grappling with the aftermath of Covid lockdowns, tax hikes from last year, escalating employment costs, and fragile consumer confidence.
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