Friday, February 12, 1999 Published at 12:08 GMT
Business: The Economy
Beer battle lost
UK beer drinkers are paying 32 pence tax per pint
High taxes on UK beer are set to stay after independent brewers Shepherd Neame lost a court case against the government.
The brewer, one of the UK's oldest, had complained about the government's decision to increase beer duties yet again, saying this was a breach of European Union rules on tax harmonisation.
The three Court of Appeal judges said they were "sympathetic" to the brewery and others fighting for lower beer prices, but said there was "no legal obligation on the UK to abstain" from raising the tax on beer.
However Shepherd Neame has vowed to fight on. It will now appeal in the House of Lords, after the court refused to refer the matter to the European Court of Justice.
Shepherd Neame and other independent brewers had argued that high beer taxes in the UK were driving them out of business, because more and more people were importing large amounts of cheap beer from France.
Flood of imports
Beer sold in the UK carries taxes eight times higher than those in France - 32 pence a pint compared to 4p. As a result, thousands of Britons cross the Channel for a day trip to France, where they stock up on beer, wine and other cheap goods.
However, the sharp price difference on alcoholic drinks has attracted smugglers as well. According to some estimates, up to 75% of the beer that crossed the Channel in 1998 was smuggled for illegal resale.
Barbara Roche, financial secretary at HM Customs and Excise, said the decision upheld "the important principle that Parliament can legitimately set excise duties in the UK, subject to minimum rates agreed with our EU partners".
European Union law obliges all member countries to strive for tax harmonisation. The EU target rate for tax on alcoholic products is currently 3.74 euros per hectolitre per 1% of alcohol. This is equivalent to 7.6p per pint.
Most EU countries tax beer near this rate, while the UK increased the duty on beer by 3% in July 1997.
Shepherd Neame began its court action in 1997 and has spent an estimated total of £300,00 in legal costs so far.
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