"Illicit beer now accounts for up to 14% of total UK sales, up 40% in just one year, according to figures from HM Revenue and Customs (HMRC). Duty: £800m in lost revenue from duty and VAT. It means the Treasury lost an estimated £800m in 2009/2010 in lost revenue from duty and VAT. In 2008/2009, the figure was £550m, with illicit beer making up 10% of the market share. The figures suggest that rising duty and the VAT increase at the start of the year is fuelling the rise in illegal imports of beer that generate no tax revenue for the Exchequer. Meanwhile, there was also a noticeable rise in illicit spirits in the UK. Illicit spirits in 2009/2010 accounted for up to 11% of the market share (2008/2009: 8%), with estimated losses for the Treasury as much as £440m (2008/2009: £310m)."
Tandleman opens an interesting discussion about how accurate the figures are, with contributions from other people, and while that discussion is relevant and informed, my main conclusion is this: if the government believes these figures, no matter what doubts any of us may have about their accuracy, then they are fiscally irresponsible to continue raising alcohol duty above the rate of inflation, especially when the economy is still in the mess the bankers created. As an aside, I'm not sure which is going up more quickly - beer tax or bankers' bonuses? Either way, we're being ripped off.
Freezing beer tax (I'm not naïve enough to foresee a cut) therefore would: help save pubs from closure and reduce job losses; help the economy by not making illegal imports even more attractive; and will help our brewers by restricting illegal competition. Will a fiscally prudent chancellor see it that way?
Seems like they don't recognise the law of diminishing returns.
ReplyDeleteThe comment made on Tandy's blog by Simon Johnson that a lot of it is exports that go astray rather than smuggled imports may help explain the figure.
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