Changes to alcohol duties are “bad news” for the hospitality sector, Wetherspoon’s boss Tim Martin has warned.
The increases to a number of drinks, set out in the Spring Budget, are set to come into force on Tuesday.
The new method, described as the “biggest single alcohol duty increase in almost 50 years”, will measure the alcohol content in a drink, and some products that previously had a low duty rate will see greater increases.
The Treasury said the historic duty changes mean that the duty paid on drinks on tap in pubs will be up to 11p lower than at the supermarket, and described the changes as designed to help pubs compete on a level playing field with supermarkets.
However, founder and chairman of Wetherspoons Tim Martin told The Independent the changes will cost his business an extra £8 million a year, and warned of “tax inequality” between pubs and supermarkets.
“The compounding factor is that pubs pay 20 per cent vat in respect of food sales, whereas supermarkets pay nothing,” he said.
“Pubs also pay about 25 pence per pint in business rates, whereas supermarkets pay a fraction of this amount - perhaps two pence a pint or so. Supermarkets use this tax advantage to subsidise beer and wine prices.
“The combo of tax inequality and tax increases is bad news,” he said.
Mr Martin said the hospitality industry is “struggling”.
“Rather than the historic British/Irish melting pot, where people congregate daily, pubs risk becoming more of a special occasion, with the daily couple of pints consumed by regulars being replaced by home drinking, to the social detriment of the country,” he said.
Mr Martin said the tax changes were ‘bad news’— (PA Archive)
The changes will see duty rise by 44p on a bottle of wine, which when combined with VAT will mean consumers will pay an extra 53p, according to the Wine and Spirit Trade Association (WSTA).
Meanwhile, the total tax on a bottle of gin or vodka will go up by around 90p.
WSTA chief executive Miles Beale claimed the Government’s new duty regime “discriminates against premium spirits and wine more than other products.”
Ebel Simkovicz, owner of Shoreditch Wine House told The Independent prices have increased by up to £1 per bottle of wine, and warned his business may need to increase prices.
It is the “wrong time” to be increasing alcohol duties, he said. “Ever since Covid, inflation has gone through the roof. There are much much less people coming to the bar as the cost of living crisis takes its toll.”
Hospitality Ulster chief executive Colin Neill warned increased duties on alcohol are set to “cripple” hospitality businesses.
Tim Martin warned pubs may change— (Getty Images/iStockphoto)
He said businesses are already under pressure in terms of inflation, rates, National Insurance contributions and insurance, and will be forced to raise the prices they charge for alcohol.
“The immediate future remains challenging, and it is vital that we ensure our valued customers understand the price increases are down to the Government – not hospitality businesses,” said Mr Neill.
“This has left hospitality businesses, who are fighting to break even, no choice but to pass on the significant duty increases to customers.
“This is heaping misery on customers and will damage hospitality businesses at the same time.”
He said taking into account overheads for labour and bills, a publican is likely to be making around 50p on a pint.
“That’s just not sustainable at a time when costs are rising all around us,” he said.
“The hospitality sector is one of the highest taxed and undervalued sectors in the UK, but we will continue to work in partnership with UK Hospitality to press the British Government to recognise the importance of the industry.”
