Small brewers have expressed concern about the government’s proposed alcohol tax reform and want to know why the proposed tax on cider will be only half the rate on beer.
The government, which announced a reform of the alcohol tax in March 2020, launched a consultation in last year’s budget to simplify the “complex, cumbersome and inconsistent” tax system.
Hailed by Rishi Sunak as “the most radical simplification of alcohol taxes in more than 140 years”, the new system was designed to reduce the number of principal tax rates from 15 to six following the principle of “the stronger the drink, the higher the rate”.
Ian Fozard, of the Society of Independent Brewers and president of Rooster’s Brewery, in Harrogate, said that under the current system, beer tax is linked to strength, while cider is taxed at a flat rate equivalent to 44 percent of a beer of comparable strength.
He said the brewing sector’s hopes that the issue would be addressed in the reforms had faded, despite statements of support for equivalence between beverage sectors and support for it from the health lobby.
“Perversum, the government is still proposing to tax beer and cider on a significantly different basis, despite these two beverage categories being clearly equivalent products in terms of strength and consumer appeal,” he said.
Fozard, 68, said the cider industry would also continue to benefit from the so-called farm exemption, under which the first 70 hectoliters – 12,318 pints – of production are exempt from excise duty and producers are not required to register with HM Revenue & Customs.
He said it was ironic that if the government introduced beer-cider equivalence, the Treasury would raise £350m in tax.
The consultation paper says that while equating the beer and cider tax would make the excise system “even simpler and more coherent”, the government is aware of the “significant impact this would likely have on the cider industry as apple and cider volumes increase.” and pear cider at 28 percent between 2009 and 2019”.
However, Fozard said this was likely due to a shift to fruit cider, which isn’t primarily made from apples or pears, adding that five of the top six cider brands are made or owned by Heineken outside the UK. world’s second largest brewer.
“What is not mentioned is that between 2000 and 2019, total cider volumes in the UK increased by 13 per cent, while beer volumes fell by 19 per cent over the same period. There is therefore no basis in logic for this contradictory decision.”
Mike Wood, 45, the Conservative MP for Dudley South and chairman of the parliamentary all-party beer group, said: “I enjoy a pint of cider but no one can explain why it pays half the tax as a beer of comparable strength. It’s not like it’s cheaper at the pub.”