The beer tax escalator, set in place by the Labour government, increases duty on beer at 2 per cent above inflation, which is currently at 5.5 per cent.
The rise is seen as a further blow to the pub industry that, along with the January VAT increase to 20 per cent, has seen the biggest tax increase on beer in a single year.
In line with the Chancellor’s previous announcement in November, the Treasury will continue with plans to increase duty on beers over 7.5 per cent abv by 25 per cent and halve duty on beers under 2.8 per cent abv.
The changes will take place as of midnight on Sunday 27 March.
Food prices
Other changes in the budget include the introduction of a Fair Fuel Stabiliser, which will raise an extra £2bn from fuel companies to subsidise the elimination of the fuel tax escalator, which was due to increase tax on petrol by 5p a litre.
The Treasury will also cut fuel prices by 1p a litre at 6pm tonight.
The move will no doubt have a steadying effect on the increasing cost of food, in terms of production and supply.
Other measures included in the budget are:
· Consultation to be launched on plans to merge income tax and National Insurance
· Increase in personal allowance tax threshold from £7,475 to £8,105.
· Additional funding for 40,000 new apprenticeships for young, unemployed people
· The introduction of 21 new “Enterprise Zones” in England
· A 15 per cent increase in the amount of credit available to small businesses
· Council planning departments to prioritise jobs and growth by cutting back on cumbersome planning regulations
· Corporation tax to reduce by 2 per cent from 1 April, and then a further 1 per cent for the next three years
· Income Tax relief on the Enterprise Investment Scheme will increase from 20 per cent to 30 per cent in April 2011