UK Government To Raise Tax On Strong Beer

An example of more than just a “strong beer:” Brew Dog End of History at 55% abv. Yes, that is how it is packaged.

Written by Kathy Gordon for WSJ.com

LONDON (Dow Jones)–The U.K. government said Tuesday it will tax stronger beers at a higher rate than weaker ones as part of its move to tackle problem drinking. The new tax rates will be revealed in the 2011 Budget and will apply to beers with an alcoholic content above 7.5% and below 2.8%.

The decision follows an informal consultation by the Treasury over the summer and complements the reclassification of strong, cheap ciders earlier this year.

The government said the new duty will help to address the consumption of cheap, “super strength” lagers that are associated with high, and dangerous, levels of alcohol consumption.

A reduction in tax on lower strength beers is designed to encourage their production and consumption and “give responsible drinkers additional choice,” it said.

No other changes to alcohol duty will be made as a result of the review.

Alcohol tax is decided by the Chancellor of the Exchequer George Osborne and will be delivered at the Budget in March.

Kristin Wolfe, Head of Alcohol Policy at brewer SABMiller PLC (SAB.JO), said: “SABMiller welcomes the coalition government’s decision to tax low strength beer at a reduced rate. Today’s proposals however do little to change the overall status quo where the tax on spirits is unchanged.”

A spokeswoman for drinks giant Diageo PLC (DGE.LN) said, “Diageo welcomes the publication of the Review of Alcohol Taxation which recommends not increasing alcohol excise duty broadly any further than the existing escalator that is in place. Lowering the duty rate for beer under 2.8% abv will incentivize the innovation of lower strength products such as Guinness Mid Strength.”

Heineken NV (HEIA.AE) was not immediately available for comment.