The controversial cider tax has been scrapped in the last-minute scramble to rush key legislation through before Parliament is dissolved next week.
The increase on cider has been reversed after ministers ran out of time to introduce the legislation before the general election.
The levy was among three taxes in the Finance Bill to be dropped.
The 10 per cent rise in the cost of cider that was introduced on 29 March – will now be reversed on 30 June 2010 unless Labour wins the election.
In a country where 1 billion pints where enjoyed last year alone, Sky News visit Alan Hogan, Hogan Cider, a producer in Worcestershire, and interview the Wurzels.
The cider industry has been trying its hardest to help the economy recover in the last few years and, as one of the few industries that have achieved growth through the recent recession, is a true British success story.
Cider drinkers were left with a bitter taste in the mouth today after the Chancellor singled them out for a 10% tax rise.
This duty increase announced today will undo much of this good work and the impact of such a significant price increase to the consumer will probably also be counterproductive in raising revenue for HMRC as well.
We already have some of the highest rates of excise duty in the world and these increases are the latest in a long series of hikes that are very damaging and are costing tens of thousands of UK jobs
What makes this so serious is that cider makers have invested millions to plant thousands of acres of new orchards in the last decade.
Orchards take years to yield a return and the loss to the rural economy and the environment will be enormous if sales decline sufficiently and the demand for English apples falls. It is the major brands that use the vast majority of the UK fruit the industry buys every year.
Henry Chevallier, chair of the National Association of Cider Makers (NACM) said: “We knew we were being singled out – the Pre Budget Report told us that. We are at saturation point on the duty on alcohol – even for a success story like cider. This dramatic increase could well reverse the growth we have generated in recent years”.
“Depending on how retailers deal with the duty this will add significantly to what consumers pay for a pint of cider. We have no control over the retail price of cider, but it could mean up to 10p a pint”.
More reaction on the increase in cider duty, this time from the industry itself. David Sheppy, of Sheppy’s Cider, a family-owned Somerset firm, says: “We are not pleased, a 10% increase is quite devastating news. A lot of money has been put into investment in the cider industry, and we don’t now want to see that investment wasted.” Mr Sheppy adds: “We are more concerned about any potential further changes in the duty bands of cider according to their strength. That is a big concern for us, that we could be hit again, but at the moment we don’t know exactly what Mr Darling’s plans are in this area.”
“Cider is much more expensive to produce than other types of drinks and it helps support the economy in many rural areas. We are a smallish company that pays a very large amount of tax. We employ 85 people and support many local suppliers here in Somerset. The extra increase in tax levied on cider over and above other categories will make it less competitive and I am sure the big brewers (almost all from overseas) will be glad of that.”
Lib Dem Treasury spokesman, and MP for Taunton, Jeremy Browne is sceptical about the hike in duty on cider, calling it “gratuitous”. “I would be absolutely amazed if it made any significant difference to binge drinking,”
Alistair Darling, Chancellor mentioned that reclassification of stronger cider to pay more tax? Not clear what the threshold is for strong cider, but expected to be > 8%.
News Report from ITN News on YouTube
Did you know that the average beer and cider drinker pay on average £419 in tax each year? And by 2012 the government plans to increase this to £558 per year.
This is due to the government taking 33% on every pint as tax, wanting to increase this by another third by 2012.
Since cider and beer have been around, the increase in both their consumption was bound to attract the attention of the tax collectors!
Lord Wellington’s administration in 1830 ended tax on cider but it was brought back during World War 1 and lasted until 1923. Cider excise duty was then reintroduced in 1976 and remains in force now. A 47% increase in cider duty in 1984 resulted in the loss of more than 500 jobs and duty increases remain a threat to the success of cider sales even today. Current UK cider and perry duty per litre is 25.61p for most products – though there are variations, particularly for sparkling cider or perry over 5.5% ABV. Source: NACM.
As a cider maker you must register with HM Customs & Excise, you may legally produce up to 1,500 gallons per year period without paying excise duty. If you go over this threshold, then the whole quantity becomes dutiable.
A record 52 pubs a week are now closing in Britain, leading to the loss of 24,000 jobs in the last year, according to new figures compiled by CGA Strategy, released to today by the British Beer & Pub Association (BBPA).
Currently cider and perry contributes around £370m annually, or more than £1m a day, in excise duty and VAT to the UK Exchequer.
Jennifer Ellison, Actress, supporting the Axe the Beer Tax campaign
The cider industry has condemned the Budget announcement to proceed with plans to raise taxes on alcohol this year. The news brings further misery to hard-pressed consumers and threatens more job losses in a sector already facing record numbers of business failures, pub closures and worsening trading conditions.
The major drinks industry trade associations warned a total of 75,000 jobs would be at risk if the plans to increase taxes further went ahead. Jobs have already been lost in our industry and the decision to go ahead with a further tax increase puts many more at risk. It’s a bitter irony that this is also bad news for taxpayers because falling alcohol sales jeopardize government revenue.
At a time when the Government is offering other industries a helping hand it is extraordinary that it wishes to harm the cider industry with further tax increases
There are two ways of doing this:
