July 7, 2009 11:16 PM

Automatic above-inflation rises in beer tax are damaging to pubs and breweries and should be scrapped, the Liberal Democrats have said.

The party tabled an amendment to the Budget-enacting Finance Bill which would reverse the effects of the "escalator" which will increase beer tax by 2% above the rate of inflation in 2010 and 2011.

Jeremy Browne, Liberal Democrat Shadow Chief Secretary to the Treasury, said beer sales were falling and 39 pubs a week were closing, with 2,200 having shut since last year's Budget.

While changes in drinking habits were partly to blame, Mr Browne said pubs were being put at even greater risk by the escalator.

And since pubs were often community hubs and places people went to eat or for entertainment, this risked leaving many areas deprived of a crucial local service.

"This escalator that is over and above inflation is damaging pubs and breweries," Mr Browne told MPs.

Beer tax rises should be restricted to the rate of inflation only, he said, adding: "What my amendment is seeking to do ... is to reduce the duty by 2% next year and in subsequent years.

"So what I'm effectively trying to do - and I hope this mechanism achieves that objective - is to cancel out the effects of the so-called escalator, which for the reason I have given, I regard as being damaging."