Business

Colin Neill: Customers dealt another blow as tax on alcohol faces biggest increase in five decades

New tax being introduced from August 1 - the biggest single alcohol duty increase in almost five decades - will push up prices which hospitality businesses will not be able to absorb, leaving them no choice but to pass on to the customer
New tax being introduced from August 1 - the biggest single alcohol duty increase in almost five decades - will push up prices which hospitality businesses will not be able to absorb, leaving them no choice but to pass on to the customer New tax being introduced from August 1 - the biggest single alcohol duty increase in almost five decades - will push up prices which hospitality businesses will not be able to absorb, leaving them no choice but to pass on to the customer

AS the summer months, and indeed, one of the busiest periods of the year for hospitality peaks, it is great to see tourists and locals out enjoying our fantastic hospitality offering here.

But what seems to be smooth sailing for some businesses this summer, actually hides the reality that many are struggling to make a profit due to increased costs, which will be made worse as the government plans to deliver another harsh blow to pubs, bars, and restaurants across the UK.

As announced by the Chancellor in his Spring Budget, this month will see a significant rise in alcohol duty, a tax driving up prices which businesses will not be able to absorb and have no other choice but pass on to the customer.

This is made worse by the new way duty (tax) on alcohol will be calculated from today onwards.

With duty now being calculated on the alcoholic strength of the drink, it means products which previously had a low duty rate will see an even greater increase.

This will be the biggest single alcohol duty increase in almost five decades, representing yet another disappointment for our pubs and restaurants that are continually lauded by the government and ministers as treasured institutions in our communities.

Hospitality is already one of the highest taxed industries in the UK. A third of a pint goes to the government in duty and VAT, not to mention other taxes like rates and National Insurance Contribution, with businesses even paying 12 per cent tax on insurance policies like public liability just to open our doors.

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Instead of providing relief at a time of much need, the government continues to exacerbate and heap on inflationary pressures on businesses who are grappling with soaring electricity costs, labour shortages and a protracted cost of living crisis.

I am in no doubt that the sustained pain the industry has experienced for some time will not alleviate any time soon. The consumer still has little by way of disposable income, and even though inflation appears to be going ever so slightly in the right direction, these duty hikes mean that a pint with friends or a glass of wine on a summer evening will now be prohibitively high for some customers. There will be little to no room for hospitality businesses to actually turn a profit.

We all know the value of hospitality and its potential to boost the local economy. In many ways, we can’t live without it. But as Stormont remains lifeless, there is little hope of unlocking the growth opportunities for businesses which are so desperately required.

More than ever, we need to see firm foundations laid for businesses to create and retain jobs, tackle these duty increases, help regenerate the Northern Ireland economy, and ultimately stave off further closures and allow businesses to keep the lights on and the doors open.

This is why Hospitality Ulster and industry partners recently rolled out the ‘Wellbeing and Development Promise’ to help boost career opportunities, retain talent in the sector and improve staff wellbeing.

I believe that there are better times ahead. Covid showed us the important role our hospitality industry plays in our social lives and despite the current financial challenges consumers are still going out, albeit sometimes less frequently.

Our, pubs, bars and restaurants still offer fantastic experiences and some of the best quality food and drink available. But the immediate future will be challenging, and I would encourage everyone to get behind hospitality, boost morale and go out to support all of our much-loved local pubs, bars and restaurants.

:: Colin Neill is chief executive of Hospitality Ulster