There have been fresh calls for the Government to abandon its policy of increasing the duty on alcoholic drinks after new figures revealed falling beer sales are costing the Treasury £257 million a year in lost taxes.
Successive above-inflation rises in alcohol duty have been blamed for a 3.9% decline in beer sales in 2010, the sixth annual drop in consumption, according to British Beer and Pub Association (BBPA) figures.
Pubs bore the worst of the hit, recording a 7.5% drop in beer sales, the biggest annual fall since 2008, but sales through supermarkets and off-licences increased by 0.6% as consumers looked for ways to cut the cost of a pint.
The BBPA said the rising tax levels and the subsequent fall in beer sales is not only damaging communities by causing the closure of pubs but is causing the Government to lose tax revenues.
BBPA chief executive Brigid Simmonds said: “Huge tax rises are having a big impact on beer sales. Beer has always been a rich revenue source for Government – but they may now be cooking the golden goose.
“As beer duty has increased so dramatically over the last few years, the amount of beer produced and sold in Britain has fallen.”
Alcohol duty has risen 26.1% since March 2008 when the Labour Government introduced a “duty escalator” that saw the tax rate increase by 2% above the retail prices index (RPI) every year. Two increases in VAT, which have seen the rate increase from 15% to 20% in the past 13 months, have also hit prices.
Pub beer sales have fallen by 20.2% over the past three years as the trade has been hit by the economic downturn, the smoking ban and increased taxes. Beer sales have also declined as a result of pub closures, with up to 40 pubs a week shutting at the height of the recession.
As beer has become more expensive, consumers have increasingly been buying it at supermarkets, where it can be purchased at a fraction of the price.
Mrs Simmonds added: “The Government should abandon plans for above-inflation hikes in beer tax in the Budget as further rises are simply unsustainable. This would create a win-win situation, with a boost for lower-strength, pub-based drinks like beer and more revenues for the Treasury.”