Budget 2010: Cider drinkers strike hardest by taxation rises on ethanol (includes video)

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Cider drinkers were left with a flat taste in the mouth yesterday after the Chancellor picked them out for a punitive tax rise.

From midnight on Sunday duty on cider will increase by 10 per cent above inflation. The price of a bottle of cider will rise by 9p while a litre of cider will cost an extra 5p.

A 1 per cent increase in duty on beer, wine and spirits will come into force at the same time, adding 2p to a pint, 10p on a bottle of wine and 36p to a bottle of spirits. Alcohol duties will rise by 2 per cent above the rate of inflation for two more years from 2013.

The definition of cider will be changed so that higher-strength versions are taxed more. More than one in ten adults drinks cider at least once a month.

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Alistair Darling suggested that the increase in cider duty would reduce the number of people abusing high-strength alcoholic drinks, but cider producers said that it could damage the industry.

Henry Chevallier, chairman of the National Association of Cider Makers, said: We are at saturation point on the duty on alcohol even for a success story like cider. This dramatic increase could well reverse the growth we have generated in recent years.

Depending on how retailers deal with the duty it will add significantly to what consumers pay for a pint of cider. We have no control over the retail price of cider, but it could mean up to 10p a pint.

What makes this so serious is that cider makers have invested millions to plant thousands of acres of new orchards in the last decade. Orchards take years to yield a return and the loss to the rural economy and the environment will be enormous if sales decline sufficiently and the demand for English apples falls.

Smokers will pay more for their cigarettes, with a tobacco duty increase of 1 per cent above inflation this year and a rise by 2 per cent in real terms each year until 2014. This means that a packet of cigarettes will cost 15p more, as will a 20-gram pack of tobacco.

The Royal College of Physicians, which called yesterday for a ban on smoking in cars, said that the predicted increases in tobacco duty were welcome. It warned, though, that tax rises on alcohol would not have a serious impact on binge drinking.

Its been a common complaint from public health professionals, as well as the drinks industry, that cider has been singled out in this way, a spokesman said. To what extent this is a radical increase in duty to cut down on high-strength drinks, or just bringing it into line with other drinks, is open to question.

The spokesman added: Duty is an imperfect demand management tool, which raises money for the Treasury, and we are worried that many supermarkets will simply absorb the proposed increase and continue providing discounted deals that encourage consumers to drink more.

Leading doctors including Sir Liam Donaldson, the Chief Medical Officer for England, have called instead for a minimum price per unit of alcohol, which studies suggest could reduce consumption and help to prevent nearly 3,000 deaths a year.

A study in the Lancet medical journal said yesterday that setting the minimum cost at 50p per unit of alcohol would save up to 50,000 people from illness in a decade and have health benefits for all drinkers.

The Conservatives have said that they would want increases in duty on problem drinks, such as super-strength beers, and would act against below-cost selling.

Brigid Simmonds, chief executive of the British Beer Pub Association, said: This latest beer tax hike piles on the misery for Britains hard-pressed pubs and beer lovers.

It is also a snub to voters, who by a majority of two to one wanted the Chancellor to scrap the beer tax escalator.

Christopher Ogden, chief executive of the Tobacco Manufacturers Association, accused the Chancellor of persisting with an ill-conceived tax measure.

On January 1, 2010, the Government imposed the largest tax increase on tobacco products in ten years and now, less than three months later, taxes are to rise again ... [yesterdays] announcement will only provide further stimulus to those who seek to profit from the illicit trade in tobacco, he said.

In a letter to The Times yesterday, 20 of Britains most senior doctors called for a ban on smoking in cars as part of a sweeping expansion of laws to protect children against the effects of inhaling smoke.

As announced at the 2009 Pre-Budget Report, the rate of bingo duty is reduced to 20 per cent.

Yesterdays Budget announced an increase in amusement machine licence duty and gaming duty bands in line with inflation. All other gambling tax rates remain unchanged.