Saturday 15 October 2011

Higher Strength Beer Duty - My View

Here are my thoughts about the introduction of Higher Strength Beer Duty, as published this week in Off Licence News

You can read the rationale behind the tax here

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The strong beer tax seems to have happened without any real reaction from the mainstream media. It's true that it was reported fairly widely at the time it was announced, but only really as a governmental policy rather than as anything that might actually affect the way that beer is perceived. It's seen as tax on binge drinking, which if you stop and analyse it for even a second, is clearly bollocks (excuse my Anglo-Saxon, but there's no other word for it). As someone who has finally learned the error of drinking more than a couple of bottles of Duvel at a sitting, it's quite clear that the stronger the beer, the less able you are to 'binge' on it. Indeed, there is an argument to made that the stronger the beer, the harder it is to drink in quantity, not just because of the higher %abv, but also that it renders you incapable with alarming swiftness. Beers like that are no use at all for a long evening in the pub.

Around 15% of the beers that we sell will be affected by the tax. At the top end (in strength terms), the strongest Belgians have seen an increase of 50p to 75p. That's a pretty drastic rise, and it remains to be seen how sales will suffer. Will people switch to lower strength beers, as is the government's wish, or will they just complain and pay up. I can remember lots of people saying that they would stop smoking when cigarettes reached a fiver a packet. They didn't.

The tax is a fudge, a farce, a fiasco. It's a cowardly, nonsensical tax that sets out to address a problem that barely exists, and will fail to make a difference, other than to those who sell stronger beer for a living. And by stronger beer, I don't specifically mean the sort of higher-strength industrial beer that the tax sets out to address, but imported beers from Europe and North America. Perhaps ironically, the British brewing industry will be largely unaffected, and the sort of beers that people actually do go out and drink all day won't be affected.

You could also make a spirited argument that rather than a blanket tax on all strong beer, the government may have been better off deciding what beers it wants to tax, and figuring out a way to accurately do that. If doesn't require too much imagination to realise that if you want to penalise the producers of strong, industrially produced beer, then what you need to do is pass legislation decreeing that if your output of a certain beer in this strength bracket exceeds X hectolitres, then an additional duty of Y is payable on it. Not hard, is it?

Regardless of all this, I'm not sure that strong beer is necessarily the cheapest way of getting drunk. The late Michael Jackson (no, not that one) famously described beer as an inefficient means of getting drunk, and he's right. It seems odd that beer is in a minority as an alcoholic drink that is taxed per degree of alcohol. Almost everything else has a flat rate, or at best, a dual-rate banding of 'ordinary' and 'stronger' versions. Strong beer is already taxed more purely by virtue of being stronger – taxing it more isn't going to make any difference to how people consume it, and will almost certainly encourage a switch to something a bit more efficient. That's an uneasy truth, and one that is too hard to address, and so we must all pay with a broad-brush solution.

15 comments:

  1. "It seems odd that beer is in a minority as an alcoholic drink that is taxed per degree of alcohol. Almost everything else has a flat rate, or at best, a dual-rate banding of 'ordinary' and 'stronger' versions."

    Spirits are taxed per degree of alcohol too - it's only wine and cider that have a banded flat rate.

    I'm totally opposed to this new tax, but in practice it will have zero effect on the pub trade.

    And, while small producers need to be protected, maybe we need to tax strong industrial cider on a par with beer.

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  2. I was in my local offie yesterday chatting to the manageress about the new tax as well as the new range of Flying Dog and Brooklyn bottles she had on display in the ale section. She was saying it's an obvious worry to their sales of craft beer, but for them the bigger problem in their shop is they've had to hide the cans of things like Carlsberg Special Brew under the counter as they are now much more prone to theft if sat on the shop floor. Whether this is due to their black market resale value being significantly higher or certain people who drink that stuff soley to get blitzed just getting more desperate with the higher prices on everything I don't know. Nonetheless I thought it was interesting that so far this seems to be a more immediate threat to their trade than to the sales of the higher end products. Time will tell I guess and for individual off-licences I guess it'll be dependent on their demographic to a large extent. Whatever happens though I can't see this helping anyone.

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  3. I've added your blog link to my post, you have a far more reasoned approach to me http://pdtnc.wordpress.com/2011/10/08/an-open-letter-to-my-mp-meps-on-beer-tax/ Nice one.

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  4. Nice one, there's plenty of mileage in a campagn against this tax. We were moved to start something from North but in the end we hada couple of problems.

    Firstly the response we recieved from the Treasury was that quite simply people who drink speciality beer 'are not affected by price'. Secondly we were told by others working behind the scenes on this that the government would not accept any objections until the tax had been enacted.

    So it's here, it's unfair, it's extremely unfair to imports, especially from Belgium which is somewhat anti european don't you think?

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  5. As always Zak, a very well reasoned and considered response. I enjoyed reading it as well, which for such a bloody dry subject is a skill in itself!

    Keep up the good work mate

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  6. "Bollocks" indeed Zak. As a brewery which started business with the intention of brewing beers at 3.3, 4.5 and 7.8 per cent, in line with our music theme, this was extremely irritating and ill-timed.
    Our one brew of 7.8% Propaganda (name chosen to reflect our feelings on the subject) was shipped just before Oct 1. Will we brew again at 7.8%? Probably not, which is a damned shame, as it was/is a tasty beer - to the best of my knowledge, nobody has drunk it with the intention of obliterating their senses before causing trouble on a Saturday night, or to warm their cockles before a night in a shop doorway.

    http://revolutionsbrewing.blogspot.com/2011/07/78prop001-propaganda-imperial-russian.html

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  7. Curmudgeon - I guess what we all want is a level playing field and a smidgeon of common sense

    Barl - as you say, time will tell, although of course, strong beer is already taxed proportionately more, by virtue of being stronger.

    pdtnc - thanks

    Matt - it's certainly anti-competitive, which might ultimately be its downfall. And saying that speciality beer drinkers aren't affected by price is the same as saying "hell, they can afford it"

    Mark - you should brew it again, because that's the only way to demonstrate that you have nothing but contempt for this legislation

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  8. "the strongest Belgians have seen an increase of 50p to 75p. "


    I guess you mean an increase of between 50 and 75p per bottle not a rise from 25p to 75p!!

    If only....otherwise you're on the money - total bollocks for political reasons, same goes for the duty escalator which allowed my MP to say "we haven't increased beer duty in this budget" - the poor ar5eh0le might even have believed it given how out of touch with reality he his.

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  9. The niche products are drank by the wealthier middle class and ought to be taxed more. The industrial products consumed by the regular guy ought to be taxed less.

    Beards and sandals ought to be taxed too.

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  10. Anon - yes, that's what I meant - the first one!

    Cookie - Hang on, you can't get all Marxist on one hand, and then demand a beard tax on the other!

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  11. First point on the background to the legislation: 'The June 2010 Budget announced that the Government would review alcohol
    taxation to tackle problem drinking without unfairly penalising responsible drinkers,
    pubs or local industry.'

    Laughable. Utter ignorance, hard to express in words. But I think you managed quite well!

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  12. I noticed in my local Asda yesterday that a few bottles of Duvel had been carefully placed to look as though the shelf was fully stocked. I'll be checking back to see if Duvel, Chimay Blueue etc. disappear from the supermarket shelves.
    I'll agree with the previous comments - why should the discerning drinker pay more because we can afford it. It is nothing to do with health just another way of squeezing the consumer.

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  13. What would the contrast be between, say, the tax on 10 oz. of Imperial Stout at 10% ABV and the tax on 5 oz. of 20% ABV port, would they be the same? What about 2 oz. of spirits at 50% ABV?

    Gary

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  14. And I should have included, a pint of beer at 5% ABV?

    Are all these taxed the same per unit of alcohol?

    Gary

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  15. I may be paranoid, but this seems to be in the same vein as other government legislation over the past 20 years or so. It appears as though they're trying to force people to be 'normal', ie to consume only what advertisers/mainstream opinion-formers consider acceptable drinks/volumes.
    This is done under the aegis of 'health', or protecting the public from themselves, but what's the point of living longer existing as a joyless, insignificant cog in the wealth pyramid? Drinking Foster's? If the price of beer continues to increase above inflation, I'll start making my own alcohol - cheers.

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Sorry about the word verification - the blog was getting spammed to bits.