Beer duty sees its highest ever levy with £3.44 billion

Final preparations for winter beer festivalNik Antona

THE taxman collected £3.44 billion last year in beer duty — the largest levy ever, new figures have shown.

Despite falling consumption, HM Revenue and Customs increased the amount of beer duty it raked in by £21 million between 2011 and 2012.

It collected £3.42 billion during 2011 and £3.27 billion in 2010.

Campaigners said the ever-growing levy at a time of falling beer sales was proof of the punitive effects of the beer duty escalator, which causes the tax on beer to rise by two per cent every year above the rate of inflation.

Nik Antona, national director of the Campaign for Real Ale (CAMRA) and spokesman for the group’s Burton and South Derbyshire branch, said: “It is astounding that the Government continues to milk a product like beer at a time when the market is declining.

“The record tax revenue figures show how this duty escalator is adversely affecting the product.

“They are treating this country’s national drink unfairly compared to other products.”

Cider duty contributed just £326 million to the national coffers in 2012 and the entire spirit market yielded £2.97 billion.

Mr Antona said he hoped Chancellor George Osborne would use his upcoming Budget to cancel the beer duty escalator.

“We are not asking them to stop taxing beer completely,” he said. “Alcohol duty has traditionally gone up annually by the rate of inflation, but it’s the two per cent added on top of that which we think is damaging.”

Mr Antona said pubs and breweries had no choice but to pass on the cost of the beer duty escalator to customers, while supermarkets were able to keep alcohol prices flat by using other products to absorb the impact of the tax hikes.

Beer production has fallen in recent years due to the declining market. There were 42 billion hectolitres produced in the UK in 2012, compared to 58.3 billion in 1994.

The duty escalator, introduced in 2008, has been blamed for the brewing and pub industry’s recent woes.

Since its introduction, duty has risen by 42 per cent and British drinkers now pay nine times more beer duty than the Spanish, 10 times more than the Italians and 13 times more than the Germans.

The escalator has also been in part blamed for the 16 per cent fall in beer sales since 2008 and the current pub closure rate of 18 per week.

The Treasury, however, has previously said it would lose £105 million over the next two years if the duty escalator was scrapped.

The levy is due to be debated by MPs in Westminster next week.