LONDON, March 20 (Reuters) - Britain's finance minister George Osborne scrapped the country's beer tax escalator on Wednesday and cut one pence off duty on a pint, cheering drinkers and providing some relief for a pub sector still enduring 18 closures a week.
The government's much criticised beer duty escalator, which pushes up the levy by 2 percent on top of inflation every year, has seen the tax on beer hiked by 42 percent since being introduced by Labour in 2008. That means over a third of every pint pulled in a pub is now paid in duty and VAT.
Shares in Wetherspoon rose 3.3 percent to 544 pence on the news, while Enterprise Inns were up 2.3 percent to 113 pence at 1340 GMT.
The announcement will also boost squeezed consumers at a time when pubs firms like Wetherspoon and Greene King are battling hard to attract sales.
"We will now scrap the beer duty escalator altogether, and instead of the 3 pence rise in beer duty tax planned for this year I am cancelling it altogether," Osborne said to big cheers.
"That's the freeze people have been campaigning for but I am going to take it one step further and I am going to cut beer duty by one pence. We are taking a penny off the pint."
The British Beer & Pub Association said it was brilliant news.
"In also abolishing the Beer Tax escalator, the Chancellor has ended a hugely damaging policy that would have made Britain's' beer the most heavily taxed in Europe," BBPA Chief Executive Brigid Simmond said.