It has been a mostly cold and wet summer so far in Britain, and everyone is complaining about the ever-increasing cost of food and everything else, but at least one thing is getting a bit cheaper–beer in pubs–enabling Brits to drown their sorrows with a pint, because alcoholic drinks will now be taxed according to their alcoholic strength.
That means drinks having alcohol by volume (ABV) levels below 3.5% (for example beer) will be taxed at a lower rate than drinks with ABV over 8.5% (for example wines and spirits).
Before this change, there were different tax rules for different types of alcohol.
In addition to the new changes, the government has also expanded its “Draught Relief” scheme, which freezes or cuts the alcohol duty on drinks poured on tap. This means that the duty pubs pay on each draft pint will be cheaper than in supermarkets. So a pint could be up to 11 pence — or 14 cents — cheaper, if the pubs pass this saving on to customers.
The government has dubbed this its “Brexit Pubs Guarantee” — an acknowledgment of the difficulties pubs are facing. Finance Minister Jeremy Hunt announced the changes with a visit to a local. “Pubs have been facing a lot of competition from supermarkets and we want to make sure they remain competitive,” he said in a video. He promised that the “duty for a pint in the pub will always be less than duty in the supermarket.”
He added: “British pubs are the beating heart of our communities and as they face rising costs, we’re doing all we can to help them out. Through our Brexit Pubs Guarantee, we’re protecting the price of a pint.
“The changes we’re making to the way we tax alcohol catapults us into the 21st century, reflecting the popularity of low alcohol drinks and boosting growth in the sector by supporting small producers financially.”
The three alcohol duty changes that have taken effect today are only possible thanks to the UK’s departure from the EU (says the UK government) and the guarantees set out in the Windsor Framework.
The previous duty system was complex and unfair but now that the UK is free to set excise policy to suit its needs, the government has brought about common-sense reforms in order to support wider UK tax and public health objectives.
Britain has always set its own alcohol taxes, so this move is less likely about Brexit and more likely about a general election next year, some analysts say. (Also, as skeptics pointed out on social media, beer already costs less in a number of European Union countries than in the U.K.)
It comes at a time when pubs around the country are struggling to stay open as higher energy bills and other costs pile up, while the rise in the cost of living keeps customers away. The government hopes the changes will win over voters and offer a much-needed boost to the country’s pub industry, which has seen near-record numbers of businesses closing. Last year, over 500 shut their doors.
William Robinson, managing director of Robinson Brewery, which operates 250 pubs, welcomed the difference in draft beer duty between pubs and supermarkets. He told the BBC: “There is clearly a benefit there of a lower duty rate on pubs.”
But not everyone is toasting the new rules.
When Prime Minister Rishi Sunak — who himself doesn’t drink alcohol — visited a beer festival to promote the changes last week, he was heckled by a pub owner unhappy with the rise in duty on higher-alcohol beverages.
For Lewis Munro, a bartender from London, the drop in price is nowhere near enough when the average pint in London costs six or seven pounds ($7.65 or 8.92). He says he will keep going to his local in the outskirts of the city — which he calls a “pretty scummy, rundown pub” — where he can get a pint for around half that price, at three pounds.The only thing better than a beer, he says, is a bargain.
Over recent years Britain’s pubs, which literally existed on every street corner, have seen a number of blows, and many have closed. One factor is that people can no longer smoke indoors in pubs, which used to be filled with smoke, another was Covid-19, another was a dramatic increase in prices of food and drinks, and another is simply that people are drinking less, or buying their beer at the supermarket to drink at home.
Sources: NPR News, UK Government.