I've been thinking, it happens from time to time. I do try and avoid the activity as much as possible as sometimes ideas occur as a result. Ideas can get me into all sorts of bother. Writing this blog started as the result of an idea. This blog takes up far too much of my time and thinking often causes new blog posts to be thought up, so, when the New Year comes around I'm going to make a concerted effort to go easy on thinking. It won't work, but I can give it a whirl. Perhaps if I drink more beer I'll kill more brain cells and thinking will become more painful, there, that was an idea.
On this particular occasion I started thinking about beer duty. My thought process resulted in me wondering if beer duty really was the big evil it's made out to be. My conclusion, put very simply, is that it is not as big a problem as people think, at least not to the pub at any rate. I think I understand this quite well as I brew beer and pay HMRC an amount that is proportional to the volume of pure alcohol that my little yeast cells make. I also know how much VAT we pay in total to the very same people. I also know the amount of income tax and national insurance payments we make as a result of being nice enough to pay people in exchange for an honest days work. Trust me, the beer duty is very small for a brew pub.
If I sell a pint of beer at 4% ABV 22p of that is a direct result of beer duty. For a big nasty brewery that makes millions of barrels of the stuff a year this amount is 44p. These values take into account the fact that VAT is a tax on this tax.
If we assume a pint of beer is £2.50, which is about what I've been charging this year, less than 10% is attributable to beer duty. The figure would be 20% if the beer is from a big McNasty brewery. Interestingly, for a pint tin of beer at the same strength costing a quid in the supermarket, nearly 50% of the price you pay is duty. Big slabs of beer will have possibly 80% of the purchase price paid as duty. I think beer duty benefits the pub. Supermarket prices will be far more sensitive to duty rises than pubs.
All spirits and spirit based RTDs attract a higher rate of tax at 27p per unit including VAT. Wine at 13% ABV attracts about the same as macro brewed beer which is 19.4p per unit. Micro brewed beer attracts 9.7p duty per unit. In actual fact most drinks attract a higher rate of duty per unit than beer. Almost no alcoholic beverage attracts less duty than micro brewery beer except cider in the range of about 3.8% to 5.5% and the very specific still cider and perry at the strengths 5.5% to 8.5%.
So, with the exception of particular strengths of cider, alcohol duty is less unkind to beer than other drinks. I would worry that if we complain too much about beer duty the government might say that it would be best if all alcohol was taxed at the same rate as whisky. That would be a bit of a bummer for beer.
A pub has quite a lot of high cost overheads: Cost of staff, electricity, heating, insurance and mortgage or rent are probably the big ones. Stress and wasted resources caused by stupid government legislation and my requirement to be compliant with a whole load of rubbish is what really effects us. Perhaps this is why most people in the industry really aren't bothered about beer duty. I'm going to stop thinking that beer duty is bad in the New Year. There, I can stop thinking about something.