Tax burden crippling family brewers

The burden of beer duty on brewers has been spotlighted by McMullen, the family-owned company based in Hertford. Speaking to the Propel online newsletter, managing director Peter Furness-Smith said the brewer’s investment programme in its pub estate was placed in jeopardy by the high taxes it has to pay to the government.

He said: “Even before the latest inflation-busting increase in duty and new tax on gaming machines, around one-third of our sales goes straight to the Exchequer in the form of tax, which increased by more than £2 million over the previous year.

“This means we hand over to the Exchequer over three times as much in tax as we make in profit. Even more incredibly, we pay the government over 20 times more than what we pay out to dividends to the investors who risk their capital investing in our pubs and the local economy. This is clearly not conducive to stimulating investment in our pubs and the local economy.”

Peter Furness-Smith was speaking as he unveiled McMullen’s latest figures. Turnover was up 3.5% to £60.8 million to 1 October 2011, compared with the 53-week period in 2010. Profit before tax increased from £5.9 million to £7.4 million. Furness-Smith said the company’s managed pubs had been performing well until the recent bout of bad weather.

He added that McMullen were supporting the European-wide campaign by Jacques Borel to reduce VAT on food and drink consumed in bars and restaurants.

“A substantial reduction in VAT for pubs is needed to help reverse the trend of cheap supermarket alcohol,” Furness-Smith said.

*McMullen is Hertfordshire’s oldest independent brewery and celebrated 185 years of brewing this year. It produces four regular cask beers and up to eight seasonal beers a year. It owns 140 pubs, including the Nag’s Head in London’s Covent Garden. Image shows Fergus McMullen, the production director, in the Hertford brewery.