The government’s plan to introduce spirits-style duty stamps on beer would lead to the equivalent of a 1p per pint price increase – wiping out wafer-thin profits, brewing representatives warned this week.
The stark prediction was made by British Beer and Pub Association chief executive Brigid Simmonds this week while giving evidence to the House of Commons’ Public Accounts Committee.
During the hearing, Simmonds clashed with Federation of wholesalers’ CEO James Bielby over who needed to take greater responsibility for preventing the loss of an estimated £500m to the Treasury’s coffers each year through lost duty on beer.
Simmonds told the committee that, because of a decline in beer sales of 25% in the past six years and a 42% increase in tax over that time, brewers in the UK were now making just 1p per pint sold. She went on to claim that the cost of introducing duty stamps would wipe this out, threatening the viability of even the country’s four biggest brewers.
Between them, Carlsberg, Molson Coors, AB InBev and Heineken only made a total of £50m profits from selling beer in the UK, she claimed. As a result of these tight margins, they would be forced to increase the price of beer by 1p in order to manage the costs associated with bringing in fiscal marks.
Simmonds argued that a better way of tackling duty fraud was to give customs officers greater resources t tackle the illicit trade. “HMRC doesn’t have the resources and they are somehow therefore choosing to put it back on the industry for us to pay the cost,” she said.
However, FWD’s Bielby argued that all members of the beer supply chain, including brewers and wholesalers, had to take responsibility for tackling duty fraud and that tax stamps would be a good way of stopping many of the problems associated with duty drawback at source.
“Wholesale margins are wafer thin and everyday this goes on they are being eroded,” he claimed. “We believe fiscal marks are a good step, along with civil penalties for companies that supply to markets that don’t exist.”
Bielby cited HMRC figures, disputed by the brewers, which suggest 500 million litres of beer brewed in the UK is shipped to the near continent each year to serve a demand of about 150 million litres. It is believed that much of the difference then finds its way back into the UK.
The government is currently consulting on measures to prevent revenue loss, including duty stamps and licensing scheme for wholesalers. The consultation is set to conclude in June.
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