Beer in Britain's pubs just got cheaper, thanks to changes in the alcohol tax

LONDON — It's been a dreary summer in the U.K., which has seen some of the rainiest summer months on record, all while the country continues to deal with the highest inflation in Western Europe. Almost everything — from food to fuel to rent — is getting more expensive.

One thing has just got a little bit cheaper, though.

The U.K. government announced last week what it called the biggest shakeup of alcohol tax in a century. Alcoholic beverages will now be taxed simply based on their strength.

That means drinks having alcohol by volume (ABV) levels below 3.5% will be taxed at a lower rate than drinks with ABV over 8.5%.

Before this change, there were different tax rules for different types of alcohol.

In addition to the new changes, the government has also expanded its "Draught Relief" scheme, which freezes or cuts the alcohol duty on drinks poured on tap. This means that the duty pubs pay on each draft pint will be cheaper than in supermarkets. So a pint could be up to 11 pence — or 14 cents — cheaper, if the pubs pass this saving on to customers.

The government has dubbed this its "Brexit Pubs Guarantee" — an acknowledgment of the difficulties pubs are facing. Finance Minister Jeremy Hunt announced the changes with a visit to a local. "Pubs have been facing a lot of competition from supermarkets and we want to make sure they remain competitive," he said in a video. He promised that the "duty for a pint in the pub will always be less than duty in the supermarket."

Britain has always set its own alcohol taxes, so this move is less likely about Brexit and more likely about a general election next year, some analysts say. (Also, as skeptics pointed out on social media, beer already costs less in a number of European Union countries than in the U.K.)

It comes at a time when pubs around the country are struggling to stay open as higher energy bills and other costs pile up, while the rise in the cost of living keeps customers away. The government hopes the changes will win over voters and offer a much-needed boost to the country's pub industry, which has seen near-record numbers of businesses closing. Last year, over 500 shut their doors.

William Robinson, managing director of Robinson Brewery, which operates 250 pubs, welcomed the difference in draft beer duty between pubs and supermarkets. He told the BBC: "There is clearly a benefit there of a lower duty rate on pubs."

But not everyone is toasting the new rules.

When Prime Minister Rishi Sunak — who himself doesn't drink alcohol — visited a beer festival to promote the changes last week, he was heckled by a pub owner unhappy with the rise in duty on higher-alcohol beverages.

Claer Barrett, consumer editor at the Financial Times, says that stronger wines and spirits will cost more. One of her own favorite tipples, an Argentinian Malbec, with alcohol content of 14% or 15%, will certainly become more expensive. Under the new law, she says, the tax "could go up by nearly a pound — or about $1.27."

Barrett says the changes will amount to a tax hike for a lot of drinks, and most consumers understand this. "I don't think, however much they've had to drink, the British public are that stupid," she says. "We all know that the tax screw is being twisted."

The spirits industry has also raised concerns about what the changes will mean for it. The Scotch Whisky Association has described the duty increase for spirits as a "hammer blow for distillers and consumers."

For Lewis Munro, a bartender from London, the drop in price is nowhere near enough when the average pint in London costs six or seven pounds ($7.65 or 8.92). He says he will keep going to his local in the outskirts of the city — which he calls a "pretty scummy, rundown pub" — where he can get a pint for around half that price, at three pounds.The only thing better than a beer, he says, is a bargain. [Copyright 2023 NPR]