Saturday 15 March 2014

Beer tax reduction

Brewers weren't happy when the tax on beer remained at a high level after the end of WW I. Faced with falling beer consumption, they desperately appealed to the government to reduce beer tax and so stimulate demand.

They were eventually partially successful, getting a flat rate 20 shillings per barrel rebate on beer duty. It was far less than they had hoped for, and only allowed beer prices to drop by 1d per pint across the board.

This is a leader article from the first issue of the Brewers' Journal in 1923.


For the third year in succession we reiterate the demand for a reduction in the beer duty; never before, however, has the position been so favourable for a successful issue. Two years ago, and even to some extent up to the spring of last year, the brewers' ease was obfuscated by the false cry on the part of our opponents that brewers themselves were responsible for keeping up the price of beer. At that time Lloyd's News typified the outlook of certain newspapers when it said that "the brewers are morally and economically compelled to give the people cheaper beer." The fictional character of this and other similar misstatements has now largely been dispelled by the wise policy adopted by the Trade in putting before the public the irrefutable and unimpeachable facts from our side, which may be summarised in the sentence which has become the slogan of this campaign. "Less duty; cheaper beer." All the ingenuity and all the misrepresentation of our highly organised opponents have not made it possible for any newspaper that has taken up the cry of "cheaper beer" to hold to their primary attestation that brewers were mainly responsible. If only the members of the Trade will redouble instead of slackening their efforts to get the truth to the people, then the ground will be cut under the feet of our opponents when, as assuredly it will be, this question is brought before Parliament."
"Brewers' Journal, 1923", page 1.

Nothing ever really changes, does it? The newspapers are still full of biased shit, especially when it comes to beer. How anyone could truly believe brewers were to blame for the high price of beer is beyond me. You only needed to look at the rate of tax to realise that was bollocks.

The leader went on to explain why beer duty should be reduced:

"The factors and considerations making for the desirability of a reduction in the beer duty accumulate in an increasing ratio with the fluxation of time. Primarily, the case for relief is founded largely on the grounds that the increase in the beer duty, having been the first fiscal act of the war period, raised as it was on no less than six separate occasions, and standing ultimately at a figure thirteen-fold that of 1914, should be the first to receive consideration now that four years have elapsed since the cessation of hostilities. This argument is supported by the fact that the increases in duty were unquestionably part of our temporary war-time emergency legislation. The point could not, perhaps, be put better than in these words, quoted from The Observer of December 31st, 1922:--

The war increases in the beer and spirits duties were, like many other war taxes, of greater social importance, emergency taxes only, and there is probably no intelligent person inside or outside the Trade who has ever imagined that they woirld or could be maintained at the war-time level when the financial condition of the country improved. If the condition and prospects of the national exchequer appear to justify a reduction of the beer duty in April next, the reduction will unquestionably be made.

This from an organ more aggressively teetotal than any other London newspaper is decidedly a useful
declaration." "Brewers' Journal, 1923", page 1.
I never realised the Observer had been a teetotal newspaper. It makes me feel all dirty for having bought it in the past.

The high price of beer was becoming a form of Prohibition for some:

"The undeniable factor of the situation is that tens of thousands of former beer-drinkers have unwillingly been forced into a state of virtual or partial teetotalism by the irrationally increased duty on beer. A form of partial Prohibition has, in effect, been set up, which is no less effective because it is not founded on a Prohibition law and which is certainly class legislation, because it affects the people in direct ratio to their spending power, so that the wealthy are left with the means of possessing alcohol whilst to the poor it has become a luxury instead of part of their daily diet. Whatever may have been the causes which have brought about this condition of affairs, the situation warrants the quotation of John Stuart Mill's pregnant words':—

Every increase of cost is a prohibition to those whose means do not come up to the augmented price.

To tax stimulants for the sole purpose of making them more difficult to obtain is a measure differing only in degree from their entire prohibition, and would be justifiable only if that were justifiable.
"Brewers' Journal, 1923", pages 1 - 2.
There probably were some in the Liberal party who were happy to snealk in a form of partial Prohibition.

Now for some numbers about tax and beer production:

"The statistics show that, whatever the real intentions of the super-taxers of beer may have been, the effect has been to diminish the output in the 12 months ended September, 1922 to 21,892,454 barrels as against 25,501,935 barrels in the corresponding 12 months of the previous year. The output for 1913-14, the  last pre-war year,  was, in  round figures, 36,000,000 standard barrels. The consumption of beer in the present year (ending March, 1923) is estimated at 18,000,000 standard barrels—that is one-half of the pre-war consumption. In a sentence, in the period when the beer duty has been increased by nearly 1,200 per cent., the consumption has decreased by one-half. Surely facts rarely told so graphic a tale. And there is also the fact that even when the enormous increases in alcohol taxation are alone considered, beer stands out as having been unfairly dealt with. Since 1913-14 the following approximate taxation increases have been made :—

Wine (unsparkling) 100 per cent.
Sparkling wines 300 „
Spirits 400 „
Beer 1,200 „
"Brewers' Journal, 1923", Page 2.

That does look pretty unfair on beer. I can't see the logic in increasing the tax on beer three times as much as that on spirits. And it's clear what effect those tax increases had on beer consumption: they halved it.

There were various proposals for how to reduce beer duty:

"Hope of a beer duty reduction runs high in the Trade ; indeed, various schemes supplying a modus vivendi have been prepared. The general basis of such schemes is a taxation reduction averaging -  some schemes putting it higher ami some lower— 35s. to 40s. per standard barrel with a view to enabling a reduction in the price of beers now sold at 9d. and 8d. per pint by 1d., and of beers now sold at 7d. and under, by 2d. a pint, except that the 5d. beer would become a 4d. instead of a 3d beer. Other schemes suggest a 1d. off the lower priced beers and 2d. off the 8d- and 9d. beers. Yet another proposes a 50/- reduction in duty and 2d. off all classes of beers. It is variously estimated that the increase in consumption which would follow in the first fiscal year upon such price reductions would be 15 per cent. to 33 per cent.; in our own view 20 per cent, would be a likely figure."
"Brewers' Journal, 1923", Page 2.
Personally, I think they should have reduced dury by 50/- and reduced the price of all beer by 2d a pint. But that's me talking as a pisshead.

But what would that cost?

"If this increase were borne out in practice, a loss of something like £20,000,000 would be entailed to the Exchequer; but as against this must be set off the normal loss which a continuance of high prices in 1923-4 would undoubtedly bring with it - a loss which we should estimate at round about £10,000,000. These figures are, of course, both tentative and approximate. Naturally, very diverse views are held by different sections of the Trade, who would be differently affected by any reduction in the beer duty. We have merely endeavoured to give an average based on the various schemes which have been advanced, but which must not be taken as embodying the general views either of the Trade or of this Journal on the subject. It seems fairly safe to say, however, that at a cost to the national exchequer of some £10,000,000, the important reductions in the retail prices of beers above, mentioned could be brought about. When the enormous contributions to the national revenue made by alcohol consumers in the last eight years are brought into account, and when consideration is given to the hardships entailed by a continuance of the existing rate of tax, and it is remembered how much the contentment of the masses of the people of this country is bound up with a reasonable beer supply, we do not think that the sum named is one which should stand in the way of the new Government. As it is, we have the declaration of Mr. Stanley Baldwin (Chancellor of the Exchequer) that "beer will certainly be one of the first subjects of taxation to come under review in order to see how far any practicable reduction in duty would benefit the consumer."
"Brewers' Journal, 1923", Page 2.

 The truth is, with Britain's economy still up shit creek, the government couldn't afford a reduction of £10 million in its income. Which is why it never happened. Want to know what did?


Beer output, tax, revenue and retail price 1921 - 1928
Year Bulk Barrels Std. Barrels Tax/Std. Brl Total Tax £ Tax/Bulk Brl. Av. sg price pint tax pint
1921 34,504,570 26,729,883 100s 123,406,257 71s 6d 1042.61 7 2.98d
1922 30,178,731 23,513,774 100s 121,864,865 80s 9d 1042.88 7 3.37d
1923 23,948,651 18,564,212 100s 92,262,893 77s 1042.72 7 3.21d
1924 25,425,017 19,890,033 80s 76,110,638 59s 10d 1043.04 6 2.49d
1925 26,734,825 20,954,392 80s 75,825,827 56s 7d 1043.12 6 2.36d
1926 26,765,610 21,034,419 80s 76,320,021 57s 1043.23 6 2.38d
1927 25,100,461 19,745,199 80s 78,763,480 62s 9d 1043.28 6 2.61d
1928 25,435,145 19,962,997 80s 77,800,471 61s 2d 1043.17 2.55d
1928 Brewers' Almanack

As predicted, only 18 million standard barrels were produced in 1923. And, despite the modest decrease in duty, revenue from it fell by £45 million.

1 comment:

Anonymous said...

At the end of the war people probably thought that things could return to normal. But there were vast public debts to service plus an ongoing cost of war pensions.Millions of men had war disabilities and there were large numbers of war widows (my grandmother drew her war widow's pension for 60 years)
Also because of casualties there would be a few hundred thousand fewer beer drinkers.Things could never be the same as before.
It's much easier for governments to tax commodities than raise money in any other way and to this day it's alcohol, tobacco and petrol which are the milch cows.