The Chancellor of the Exchequer raised duty on alcohol by 2% today. It could have been a lot worse, but within minutes the various alcohol industries in the UK were up in arms about it, saying their respective sectors would be hit by the duty increase.The Whisky industry, usually first off the blocks to object, described it as "a blow to the industry that comes at the worst possible time". The British Beer and Pub Association said it was "a death warrent" for pubs. One of these I agree with, one is silly.
Whilst this was a duty rise that wasn't wanted by the trade, it won't really effect you as a consumer. A four pence duty rise on wine, 13p on spirits and a penny on a pint of beer really isn't that much in the grand scheme of things, as you aren't going to quibble over a penny for your pint of Guinness.
But it will effect UK businesses. Retailers and pubs are fine. Despite the complaints from these two sectors of the market, they really don't have anything to worry about. If a retailer has to put up the price of a particular bottle of wine, and this makes it too expensive for the customer, the punter will just buy a different, cheaper bottle of wine. Even if a penny on a pint of beer will translate to five pence added to the sale price, people will still buy as many pints as they would normally do. Five pence per beer is not a massive amount on an evening out, even if you drink 20 pints, as that still amounts to only a pound extra, and if you can afford to buy 20 pints in the first place, you can afford an extra quid! This extra certainly isn't going to result in pubs across the land boarding up their windows, so the Beer and Pub Association is bein a little melodramatic!
So who will be affected by this? Simple really, producers. If you are a whisky producer Scotland, you have to increase your prices by 15p per bottle. Supermarkets will not accept that, and demand that producers absorb the increase in duty. Then smaller retailers will see that the supermarkets are undercutting them and demand a similar discount. Take a company like Diageo that produces everything from Lagavulin to Smirnoff in the UK. They are being hit in a huge way, but are fortunate that they are big enough for it not to ruin their business. The same cannot be said for smaller operations who might not go bust but will certainly have a few sleepless nights and may have to lay some people off.
Darling is taxing the one group of companies that this country needs more of to kick start our economy and get us out of this recession; producers. Not exactly the best way to stimulate the economy...
Comments