VAT increase 'will hit pubs hardest'
Published:  04 January, 2011

The new 20% VAT rate will hit the on-trade harder than most of the take-home drinks market, it has been claimed.

The British Beer & Pub Association said today’s increase will add a further 6p to the price of a pint of beer, pushing the average cost through the £3 mark for the first time.

The organisation said supermarkets would be better placed to absorb the impact of the VAT increase, which is intended to raise an extra £13 billion in revenue for the government.

BBPA chief executive Brigid Simmonds said: “The VAT rise is another tax blow for the industry. The Treasury is piling tax on top of tax.

“The 26% rise in beer duty in the past two years will now have an even higher VAT rate charged on top of it. The Treasury needs to think again when it comes to plans for further beer tax hikes in March.

“The Government has recognised that tax increases harm pubs, and wants policies that don’t damage the sector. Now is the time to translate this wish into action, with policies that keep pubs open, and create jobs and wealth in the UK economy.”

Some retailers have pledged to keep prices at original levels to help cash-strapped customers. A poll by the British Retail Consortium found that 80% of retailers believe the VAT increase will hit sales this year.

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