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UK & World

U.K.’s New Alcohol Taxes Are Aimed at Keeping Pubs Open and Votes Flowing

When Britain’s prime minister, Rishi Sunak, a teetotaler, dropped in on a west London beer festival on Tuesday, he was looking for votes rather than pints while promoting a government policy that he said would ease the financial squeeze on some of Britain’s drinkers.

Yet not everyone is convinced by the new set of alcohol tax rates, which are expected to cut the cost of beer for pub-goers but which have angered many other Britons by raising the fees on most other alcoholic beverages.

As Mr. Sunak served a pint of beer at the festival, one bystander heckled him, crying out: “Prime minister! Oh, the irony that you’re raising alcohol duty on the day that you’re pulling a pint.” Another thought Mr. Sunak needed reminding that the drink he was pouring was “not Coca-Cola,” Sky News reported.

With high inflation rates eroding living standards in Britain, an election expected next year and Mr. Sunak’s Conservative Party trailing badly in the polls, his government was trying hard to put its best spin on what the new rules would mean for the average voter.

That includes what the government is calling a “Brexit pub guarantee” — a policy that it is touting as an example of the greater flexibility in setting tax rates that Britain gained by leaving the European Union.

“The duty for a pint in a pub will always be less than the duty for a pint in a supermarket,” Jeremy Hunt, the country’s finance minister, said in a video message filmed on a visit to a pub. “That is really to help pubs keep their heads above water, and we think that is a really positive thing.”

Duties on alcohol had been frozen since 2020, partly to help Britain’s pubs, which play a celebrated role in national life but which have been battered by the coronavirus pandemic, labor shortages and inflation. Thousands of them have closed in recent years.

Although higher taxes will now be levied on stronger drinks, the government says that about 38,000 pubs around the country will benefit from reduced taxes on alcoholic drinks poured on tap. It says that the duty that pubs pay on each such drink, including pints of beer and cider, will be up to 11 pence, or 14 cents, cheaper than in supermarkets.

It also described the shake-up as the biggest in the system in the last 140 years.

The changes, and other concessions for small producers, were welcomed by Barry Watts, the head of public affairs at the Society of Independent Brewers, a trade group. “Hopefully we will see more people because of this getting off their sofas returning to their bar stools to support their local community pub,” he said.

Tax on sparkling wine, which had been higher than that levied on still wine, will decrease, leaving it around 19 pence a bottle cheaper if retailers pass on the reduction. Still wine could increase 44 pence a bottle, and spirits and fortified wines will be subject to even bigger price increases.

On Tuesday, Mr. Sunak defended the changes by saying that the government was bolstering the economy “by cutting taxes for small producers so they can expand and employ more people.” He added that “most people would agree” that paying higher taxes for higher alcohol content is a “a common-sense principle.”

That sentiment was endorsed by the Institute of Alcohol Studies, a body that focuses on the effects alcohol has on society. The group said that it supported the shift to a more proportionate tax system related to the strength of drinks, but it argued that the duty rates were still set too low.

Yet Miles Beale, the chief executive of the Wine and Spirit Trade Association, an industry lobby group, noted that the sector faced other challenges, including constrained spending among much of the public, persistently high inflation and rocketing prices for glass.

“Amongst all this pressure, the government has chosen to impose more inflationary misery on consumers on 1 August, with the biggest single alcohol duty increase in almost 50 years,” he said.

There was disappointment, too, in Scotland, where the Scotch Whisky Association also condemned the change.

“The 10.1 percent duty increase is a hammer blow for distillers and consumers,” said Graeme Littlejohn, the association’s director of strategy. “At a time when inflation has only just started to creep downwards, this tax increase will continue to fuel inflation and make it more difficult for the Scotch whisky industry to invest in growth and job creation.”

For Mr. Sunak, though, any fallout will be political rather than personal, since his favorite drink — Mexican Coke — is nonalcoholic and will therefore be unaffected.

https://www.nytimes.com/2023/08/01/world/europe/uk-alcohol-levies.html U.K.’s New Alcohol Taxes Are Aimed at Keeping Pubs Open and Votes Flowing

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