What's the real tax take on a pint?

[garypeacock]

All,
I'm having an argument with myself about the tax on a typical pint.
This info is for a book I'm putting together.

I have the following.
1980, excise duty per pint = 9.1p, price of said pint 35p. 26%
2008, excise duty 34p, price of pint = £2.40. 14%

I know that there's the tax escalator thing, which I believe is 2% above the rate of inflation.

What is the true tax take today, on a pint? Is it above 26%?

regards
Gary

[PeterE]

Standard beer duty is currently £18.57 per percentage point of alcohol per hectolitre. That means 42.2p on a pint of 4% beer. The 20% VAT inevitably added to that makes it 50.6p before adding on any brewing costs or margins.

Obviously the percentage tax take depends on the selling price. If that pint was sold at £3, it would incur VAT of 50p and duty of 42.2p, so the total tax take would be 92.2p, or 30.7% of the selling price.

The duty alone is 14.1%, the duty+VAT on duty 16.9%.

[garypeacock]

Peter,
Many thanks.

So the tax on a pint has gone up from 26% to 30.7% since 1980, that's an 18% rise.
In real terms the price of a pint has gone up from 35p to (adjusted for inflation that's £1.14) £3.00 a rise of more than 250%

We can't just blame the tax rise then?

[PeterE]

There's little doubt that, for whatever reason, the average price of a pint in a pub has gone up by considerably more than the RPI over the past thirty years, so that tends in percentage terms to offset the effect of higher duty.

CAMRA have been carrying out an annual prices survey for over twenty years so should somewhere have figures for the average price of a pint of cask beer each year.

[Boat Inn Ashleworth]

No you can't although we'd all like to.

The major reason for the rise in the cost of a pint in the pubis the pubco but also the ever decreasing numbers of drinkers. Therefore costs have to be spread ever thinner eg £1000.00 costs over 1,000 pints rather than over 2,000 in a week, simple but true.

In some ways the continued closure of pubs is good, we have too many in my humble opinion, fewer will mean less choice but should mean better quality, better atmospheres and just maybe, better prices.

[The_olde_brewer]

fewer pubs will mean more choice as there is a better chance of finding a good pub selling excellent beer.

[johng]

but if there are fewer pubs then there is less competition so higher prices i would presume. cheers john

[PeterE]

fewer pubs will mean more choice as there is a better chance of finding a good pub selling excellent beer.

Ah yes, let's campaign for more pub closures, that'll go down well

[Boat Inn Ashleworth]

Competition doesn't always mean cheaper prices, far from it. Local price fixing has been going on for years.

That said experienced landlords know value for money is important and customers can and do vote with their feet. Unfortunately many are having to absorb pubco rises themselves in fear of losing customers. That can't last for long and therefore another pub closes or remains open artificially with temporary management and the former tenant often loses everything.

Fewer pubs can mean cheaper prices through higher volume of sales and therefore less profit per sale required to cover costs. Higher volumes of sales mean quicker turnover of barrels and therefore better quality of beer. Atmospheres are enhanced through more customers, after all no one drinks in an empty pub.

Which would you prefer to drink in, the hub of the community, with quality products offering value for money or one of say 3 run down empty pubs with stale beers and paying top whack to help keep them open?

[PeterE]

Fewer pubs can mean cheaper prices through higher volume of sales and therefore less profit per sale required to cover costs. Higher volumes of sales mean quicker turnover of barrels and therefore better quality of beer. Atmospheres are enhanced through more customers, after all no one drinks in an empty pub.

Which would you prefer to drink in, the hub of the community, with quality products offering value for money or one of say 3 run down empty pubs with stale beers and paying top whack to help keep them open?

It's not as simple as that. Unlike, say, petrol stations, pubs are not a homogenous offering and their catchment area can be geographically limited. What you say may hold true in the centres of cities and large towns where there are numerous pubs close together, but beyond that, for every pub that closes, there will be some people for whom going to the pub at all ceases to be an option on at least some occasions. Plus the atmosphere or facilities of the remaining pub may not appeal to them.

I certainly don't advocate flogging dead horses when it comes to saving pubs, but the idea that as a general rule closing one pub strengthens the rest is somewhat simplistic.

[Boat Inn Ashleworth]

Agreed, far too simplistic and of course circumstances differ in every given situation.

However, good pubs rarely close other than financial gain for the owner. Those are the ones CAMRA do and should campaign to save.

[garypeacock]

Thanks all for your thoughts and answers. I must admit the more I look into this the more I'm convinced that more pubs will close before the situation improves.

not sure if that's a good or bad thing, we'll find some sort of equalibrium

[The_olde_brewer]

"However, good pubs rarely close other than financial gain for the owner. Those are the ones CAMRA do and should campaign to save."

I thoroughly agree. Hard to see how such a pub is worth more as a domestic house than as a good profitable pub. Presumably offers to buy it ( by the locals or other parties ) are ignored.