Scotland's licensed trade sector has condemned sweeping alcohol tax changes brought in today under the Conservatives "Brexit Pub Guarantee" as "naive and fanciful".

The UK Government insists the new ABV (alcohol by volume)-based system is less complex and means duty on drinks will be fairer and responsive to new products entering the market as consumer tastes evolve. 

The changes mean that the rate of duty on draught beer and cider is reduced by 9.2%, whereas the standard rate of duty on packaged beer and other alcoholic drinks, including whisky, will rise by 10.1% after Chancellor Jeremy Hunt announced in March that the freeze to alcohol duty would end on August 1 and increase by the then rate of inflation.

This move to create a differential between on and off-sales duty was not previously possible because of EU regulations and has been described by Mr Hunt as a “Brexit Pub Guarantee”.

READ MORE: Price of wine and spirits soar as new UK tax brought in

The increase 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).

Duty on 18% cream sherry will go up from £2.98 to £3.85, with VAT adding up to an increase of more than £1 a bottle, while a bottle of port will go up by more than £1.50. The total tax on a bottle of gin or vodka will go up by around 90p.

Paul Waterson, spokesman for the Scottish Licensed Trade Association (SLTA), said the sector was not convinced that the reduction in draught beer and cider duty will lead to lower prices in pubs as drinks' producers will not pass on the saving.

"For the Chancellor to say this cut in draft beer duty is a ‘Brexit Pub Guarantee’ is as naïve as it is fanciful," he said.

“We know from experience that we don’t benefit from cuts to alcohol duty because the duty is paid by producers, who do not adjust their prices down accordingly when selling to us. 

"It is a system designed to benefit the producers and the big pub companies. They are able to negotiate price discounts whereas smaller independent operators, such as our members, do not have that power.”

In 2021, the SLTA supported a radical proposal to cut duty in pubs and raise it in off-sales – a move that would boost the pub and bar business and simplify the system.

Mr Waterson pointed to research from the Social Market Foundation which shows this could be “revenue neutral” to the Treasury. Its analysis set out how reforms to alcohol duty could boost pub sales by 100 million pints a year, providing a lifeline to the hospitality industry and reducing harmful drinking.

He added: “This would have been the radical change that we needed. Our premises would claim relief on alcohol duty paid under the current alcohol relief scheme which is in place at the moment for certain businesses. The changes today will keep the savings in the hands of the producers.” 

The changes have already been strongly condemned by the representatives of the Scotch Whisky Association (SWA) who say the tax rise will fuel inflation and that pubs are "far more than beer and cider."

Director of strategy Graeme Littlejohn of the SWA said: "The 10.1% duty increase is a hammer blow for distillers and consumers.

"At a time when inflation has only just started to creep downwards, this tax increase will continue to fuel inflation and make it more difficult for the Scotch Whisky industry to invest in growth and job creation in Scotland and across the UK supply chain.

"Rather than choosing to back an industry which the UK Government promised to support through the tax system, the Government has chosen to impose the largest duty increase in almost half a century, increasing the cost of every bottle of Scotch Whisky sold in the UK by almost a pound and taking the tax burden on the average priced bottle to 75%.

"In a further blow, distillers will now face a further competitive disadvantage in pubs, restaurants and bars by being unfairly excluded from tax breaks available to beer and cider.

"Pubs and other on-trade businesses are about far more than beer and cider."
The Prime Minister insisted businesses and consumers will benefit from the alcohol duty changes.

Mr Sunak said: "I want to support the drinks and hospitality industries that are helping to grow the economy, and the consumers who enjoy the end result.

"Not only will today's changes mean that that the price of your pint in the pub is protected, but it will also benefit thousands of businesses across the country.
"We have taken advantage of Brexit to simplify the duty system, to reduce the price of a pint, and to back British pubs."

The Chancellor said the UK Government was doing "all we can" to help Britain's pubs as they face rising costs and said the change taking effect on Tuesday "catapults us into the 21st century".

The Treasury has said that more than 38,000 UK pubs will benefit from tax relief that effectively freezes or cuts the alcohol duty on beer poured from tap from Tuesday.

Mr Hunt said: "British pubs are the beating heart of our communities and as they face rising costs, we're doing all we can to help them out. Through our Brexit Pubs Guarantee, we're protecting the price of a pint.

"The changes we're making to the way we tax alcohol catapults us into the 21st century, reflecting the popularity of low alcohol drinks and boosting growth in the sector by supporting small producers financially."