Evaluating the impact of progressive beer duty on small breweries: a case study of tax breaks to promote SMEs
We examine whether the 2002 introduction of progressive beer duty (PBD) in the UK has had its desired or predicted effects. The purpose of the new tax relief was, in the words of the then Chancellor of the Exchequer, to “encourage one group of small businesses: the nation’s small brewers”. A dataset has been created of all small breweries in the United Kingdom from 1988 to 2008, recording the dates of their creation, progression, and, where relevant, extinction. We find no evidence of a change in survivorship consequent upon the introduction of PBD. However, there is some evidence of an increase in the rate of formation of small breweries. These findings are consistent with predictions from standard economic theory and thus may be relevant to wider policy debate on the use of targeted tax breaks to support small and medium enterprises.
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