Putting more tax on British beer is starting to depress the amount of money the Treasury raises, new research released this week suggests.
Stuart Neame, author of the research and an industry specialist on beer imports from Calais said the research "raises fundamental questions about the logic behind the government's beer tax policy".
Neame, vice-chairman of the Kent brewer Shepherd Neame, said one reason why higher duty does not boost Treasury revenues is that it increases the difference between beer prices in Britain and France and encourages the illegal trade in beer smuggling.
He said that while the government admits it has done no investigation of this effect, the research suggested that every 1p on duty causes an extra 125,000 pints to be imported from Calais every day - 45.6m pints a year.
Neame said: "A second error in the Treasury's calculations is that higher duty depresses beer sales by over 50% more than was previously believed.
Lower beer sales inevitably mean less tax.
"This research shows that the only winners from excessive duty rates are the French Treasury and the criminals who smuggle beer.
The losers are British consumers, taxpayers, pubs, off-licenses and the Treasury.
"This research challenges the Government"s assumptions about beer taxes.
We are asking the Government to take the work forward and launch a proper investigation into the full economic and social effects of their beer tax policy.
Neame said it would only need a modest cut in beer duty, back to 1993 levels, to put most beer smugglers out of business. There would be no cost
to the government, and in fact, a small cut in beer duty would increase revenue and provide the Treasury with more money to spend on priorities such as schools and hospitals, he said.
"Cutting beer taxes is an opportunity to create a win-win for the British public and the Government."
The research found that revenue from beer duty grew by 3% in 1997, the second year of the Conservatives' duty freeze. In the following three years revenue growth fell to 2% a year despite annual increases in beer duty rates.
Neame said: "The net profit on beer bootlegging is only about 8p per pint, so beer smuggling could be eliminated by a modest cut in UK duty.
"One third of the on e million pints paer day of beer imported from France can be attributed to this Chancellor's three increases on beer duty.
Stuart Neame, author of the research and an industry specialist on beer imports from Calais said the research "raises fundamental questions about the logic behind the government's beer tax policy".
Neame, vice-chairman of the Kent brewer Shepherd Neame, said one reason why higher duty does not boost Treasury revenues is that it increases the difference between beer prices in Britain and France and encourages the illegal trade in beer smuggling.
He said that while the government admits it has done no investigation of this effect, the research suggested that every 1p on duty causes an extra 125,000 pints to be imported from Calais every day - 45.6m pints a year.
Neame said: "A second error in the Treasury's calculations is that higher duty depresses beer sales by over 50% more than was previously believed.
Lower beer sales inevitably mean less tax.
"This research shows that the only winners from excessive duty rates are the French Treasury and the criminals who smuggle beer.
The losers are British consumers, taxpayers, pubs, off-licenses and the Treasury.
"This research challenges the Government"s assumptions about beer taxes.
We are asking the Government to take the work forward and launch a proper investigation into the full economic and social effects of their beer tax policy.
Neame said it would only need a modest cut in beer duty, back to 1993 levels, to put most beer smugglers out of business. There would be no cost
to the government, and in fact, a small cut in beer duty would increase revenue and provide the Treasury with more money to spend on priorities such as schools and hospitals, he said.
"Cutting beer taxes is an opportunity to create a win-win for the British public and the Government."
The research found that revenue from beer duty grew by 3% in 1997, the second year of the Conservatives' duty freeze. In the following three years revenue growth fell to 2% a year despite annual increases in beer duty rates.
Neame said: "The net profit on beer bootlegging is only about 8p per pint, so beer smuggling could be eliminated by a modest cut in UK duty.
"One third of the on e million pints paer day of beer imported from France can be attributed to this Chancellor's three increases on beer duty.
