BUDGET 2012: Packets of cigarettes to go up by 37p while alcohol cost increases by 5%
- Average price of a pint rises to £3.17 as wine expected to hit an average of £5 a bottle
- Duty on cigarettes increases by five per cent above inflation
- Tax hike comes despite inflation already pushing up price of alcohol
- Cost of beer has risen by 40 per cent since 2008
Sin taxes: Beer and cigarettes have been hit by a rise in duty in the budget today (file picture)
Drinkers and smokers faced added pain today as George Osborne confirmed another duty rise on alcohol and cigarettes.
The Chancellor told the House of Commons that alcohol will be subject to a rise in duty of 5.4 per cent that will see the price of a pint rising by as much as 10p.
Cigarettes meanwhile will increase by five per cent above the rate of inflation, increasing the average price of a packet of 20 by 37p.
Wine and spirits will also be hit by the increase in alcohol duty. The average bottle of wine will now rise to £5, according to industry figures.
George Osborne told the House of Commons today that the increases would be effective from 6pm tonight.
He said: ‘Smoking remains the biggest cause of preventable illness in this country.
‘There is strong evidence that increasing the price of cigarettes deters people from smoking.
‘Duty on a packet of cigarettes will rise by five per cent above the rate of inflation. This will increase the cost of a packet of cigarettes by 37p.’
The Chancellor confirmed that there will be no change in alcohol duty and it will therefore increase by two per cent above inflation, which current stands at 3.4 per cent. The overall increase in alcohol will be four per cent and the changes will be effective from 6pm today.
Economists believe that an extra one per cent in alcohol duty would benefit government finances by £60 million and £30 million could be gained from adding one per cent to cigarette duty.
The extra revenue will help to offset raising the income tax threshold for millions of workers, which will cost the Treasury £3bn a year.
But smokers’ groups have slammed the duty increase on duty on tobacco products as a ‘smugglers’ charter’.
Simon Clark, director of Forest, said: ‘This is a smugglers’ charter. More and more consumers will turn to the black market or buy their tobacco abroad.
Mr Osborne said that smoking was the biggest cause of preventable illness in the UK and there was evidence higher price would deter addicts (file picture)
‘The elderly, the low paid and the unemployed will be hit the hardest but this is an attack on all law-abiding smokers who support Britain’s retailers by purchasing their cigarettes at home.
‘The only people celebrating this decision will be criminal gangs and tobacco control lobbyists.’
Increase on alcohol duty are being introduced under the duty escalator announced in 2008 by the previous Government. Beer taxes have increased 42 per cent since the budget that year.
The ‘sin taxes’ came despite official inflation figures showing that prices of alcohol had leapt pt 2.6 per cent in February — the biggest ever increase for the month.
The latest inflation figures published yesterday show the rate of inflation on most types of alcoholic drink has risen significantly since December 2011.
According to analysis by the Wilson Drinks Report, WDR, inflation on spirits jumped from 2.0 per cent in January to 11.2 per cent in February, whilst inflation on wine increased from 3.0 per cent to 5.4 per cent, with inflation on beer has more than doubled from 3.6 per cent to 7.7 per cent.
Experts blamed price ‘resetting’ after New Year discounts — but also the higher cost of grain and transport.
The rises are likely to anger those in the pub and brewing industry who have accused the Coalition of putting up to 1m jobs at risk with the changes.
Support: George Osborne delivers his budget speech to the House of Commons today as David Cameron looks on
Chancellor of the Exchequer George Osborne holds his budget case outside number 11 Downing Street today before delivering his budget to the House of Commons
Tim Martin, chairman of the Wetherspoon pub chain said: ‘We are disappointed that excise duties on alcohol will increase by 2 per cent beyond the rate of inflation, since the British people are now paying 40 per cent of all the alcohol duties in Europe.
‘We are also very disappointed that pubs will continue to pay 20 per cent VAT on food when supermarkets pay nothing, enabling them to cross-subsidise their prices for alcoholic drinks.’
Camra said the announcement will lead to the price of a pint increasing by between 5p and 10p in pubs and means that beer duty has increased by more than 40 per cent since 2008.
Chief executive Mike Benner said: ‘The fact Britons are forced to pay over 40 per cent of the EU beer tax bill but consume only 13 per cent of the beer sold in Europe is remarkable.
‘British beer in a pub is so heavily hit with duty and VAT, the taxman’s whirlwind hikes translate to him guzzling a third of every pint served, a shadow cast over the beer drinker depriving people of an affordable night down their local.’
The British Beer & Pub Association (BBPA) yesterday called for a freeze in beer tax in the budget, saying a boost was needed for an industry which provides one million jobs.
The organisation cited a survey showing 54 per cent of the public supported the freeze.
The group published a report before the budget into the ‘vital role’ that the industry plays in creating jobs across the country, claiming that 980,000 people depend on the sector for their livelihoods.
Threat: Experts warned that up to a million people in the brewing and pub industries could lose their jobs as a result of increasing costs (file picture)
Research in parliamentary constituencies showed that London and Westminster had the most pub-based jobs in the country at 11,000, followed by Manchester Central (5,700), Birmingham Ladywood (5,500) and Liverpool Riverside (5,300).
It added that the beer and pub trade adds more than £21bn to the UK economy every year and £13.4bn in UK wages are dependent on the trade each year.
Chief executive Brigid Simmonds said today: ‘This is a huge lost opportunity to put British jobs and pubs first. Beer tax has now risen by 42 per cent since the misguided escalator policy was introduced just four years ago. It means the loss of over 5,000 jobs this year, and hundreds of pub closures.
‘Since 2004, the tax on beer has risen by 60 per cent, but tax revenues have fallen far short, with only a 10% rise in duty revenues despite the huge toll in lost jobs and pubs, and lost revenue through VAT as beer sales have fallen by 25 per cent.
‘It beggars belief that further hikes are planned next year. The Government must rethink this damaging policy before even more harm is done to the British brewing and the pub trade.’
The association said the average new price of a pint of lager will be £3.17, adding that beer tax was now 12 times higher than in Germany, with pubs having to pay £2,800 each in extra duty.
By RICK DEWSBURY PUBLISHED: 13:15, 21 March 2012 | UPDATED: 09:53, 22 March 2012 Read more: http://www.dailymail.co.uk/news/article-2118149/BUDGET-2012-Cigarettes-37p-alcohol-cost-increases-5.html#ixzz1pqOvRrj9
